深华发Ｂ：2020年半年度报告（英文版）

SHENZHEN ZHONGHENG HUAFA CO. LTD.

SEMI-ANNUAL REPORT 2020

August 2020

Section I. Important Notice Contents and Interpretation

Board of Directors Supervisory Committee the directors supervisors and

senior executives (excluding the follow who has objection statement) of

Shenzhen Zhongheng HUAFA Co. Ltd. (hereinafter referred to as the Company)

hereby confirm that there are no any fictitious statements misleading statements

or important omissions carried in this semi-annual report and shall take all

responsibilities individual and/or joint for the reality accuracy and completion

of the whole contents.Li Zhongqiu Principal of the Company Yang Bin person in charger of

accounting works and Wu Ai’jie person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of 2020

Semi-Annual Report is authentic accurate and complete.

All directors are attended the Board Meeting for report deliberation.

Concerning the forward-looking statements with future planning involved in the

Report they do not constitute a substantial commitment for investors. Majority

investors are advised to exercise caution of investment risks.Risks factors are being well-described in the Report found more in risks factors

and countermeasures disclosed in Prospects for Future Development of the

Board of Directors’ Report.

The Company has no plan of cash dividends carried out bonus issued and

capitalizing of common reserves either.

Contents

Semi-annual Report 2020 ................................................................................................................ 1

Section I Important Notice Contents and Interpretation .............................................................. 2

Section II Company Profile and Main Financial Indexes .............................................................. 5

Section III Summary of Company Business .................................................................................... 8

Section IV Discussion and Analysis of Operation ........................................................................... 9

Section V Important Events ............................................................................................................ 18

Section VI Changes in shares and particular about shareholders ............................................. 36

Section VII Preferred Stock ............................................................................................................ 40

Section VIII Convertible Bonds .................................................................................................... 41

Section IX Particulars about Directors Supervisors and Senior Executives ............................ 42

Section X Corporate Bonds ........................................................................................................... 43

Section XI Financial Report ............................................................................................................ 44

Section XII Documents Available for Reference ........................................................................ 151

Interpretation

Items Refers to Contents

Company Shen HUAFA Refers to SHENZHEN ZHONGHENG HUAFA CO. LTD.

Hengfa Technology Refers to Wuhan Hengfa Technology Co. Ltd.

HUAFA Property Refers to Shenzhen Zhongheng HUAFA Property Co. Ltd

HUAFA Lease Refers to Shenzhen HUAFA Property Lease Management Co. Ltd

HUAFA Trade Refers to Wuhan Zhongheng HUAFA Trade Co. Ltd.

Wuhan Zhongheng Group Refers to Wuhan Zhongheng New Science & Technology Industrial Group Co. Ltd

HK Yutian Refers to Hong Kong Yutian International Investment Co. Ltd.Hengsheng Photo-electricity Refers to Wuhan Hengsheng Photo-electricity Industry Co. Ltd.Hengsheng Yutian Refers to Wuhan Hengsheng Yutian Industrial Co. Ltd.Yutian Henghua Refers to Shenzhen Yutian Henghua Co. Ltd.

HUAFA Hengtian Refers to Shenzhen HUAFA Hengtian Co. Ltd.

HUAFA Hengtai Refers to Shenzhen HUAFA Hengtai Co. Ltd.

Shenzhen Vanke Refers to

Shenzhen Vanke Real Estate Co. Ltd. now renamed as Shenzhen Vanke

Development Co. Ltd.

Vanke Guangming Refers to Shenzhen Vanke Guangming Real Estate Development Co. Ltd

V& T Law Firm Refers to Shenzhen V& T Law Firm

Huafa Technology Refers to Shenzhen Zhongheng Huafa Technology Co. Ltd.

Section II. Company Profile and Main Financial Indexes

I. Company profile

Short form of the stock Shen HUAFA -A Shen HUAFA - B Stock code 000020 200020

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

Chinese)深圳中恒华发股份有限公司

Short form of the Company

(in Chinese if applicable)深华发

Foreign name of the

Company (if applicable)

SHENZHEN ZHONGHENG HUAFA CO. LTD.

Abbr. of the foreign name

(if applicable)

N/A

Legal representative Li Zhongqiu

II. Person/Way to contact

Secretary of the Board Rep. of security affairs

Name Niu Zhuo

Contact add.

618 East Tower Huafa Building

No.411 Bldg Huafa (N) Road Futian

District Shenzhen

Tel. 0755-86360201

Fax. 0755-86360206

E-mail huafainvestor@126.com.cn

III. Others

1. Way of contact

Whether registrations address offices address and codes as well as website and email of the Company changed in reporting per iod or

not

√Applicable □ Not applicable

Address for registration No.411 Bldg Huafa (N) Road Futian District Shenzhen

Post code of the address for registration 518031

Office address

6/F East Tower Huafa Building No.411 Bldg Huafa (N) Road Futian

District Shenzhen

Post code of the address for office address 518031

Company’s Internet Web Site http://www.hwafa.com.cn/

E-mail huafainvestor@126.com

Inquiry date for the extraordinary notice

released on appointed website (if applicable)

2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not

√ Applicable □ Not applicable

Newspaper appointed for information disclosure Securities Times; Hong Kong Commercial Daily

Website for annual report publish appointed by

CSRC

http://www.cninfo.com.cn

Preparation place for semi-annual report Office of the Board in 6/F Huafa Building Futian District Shenzhen

Inquiry date for the extraordinary notice released

on appointed website (if applicable)

IV. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data or not

□Yes √No

Current period Same period last year

Changes over last year

(+ -)

Operating income (RMB) 300703421.38 339190174.05 -11.35%

Net profit attributable to shareholders of

the listed company (RMB)

3165597.55 2580411.13 22.68%

Net profit attributable to shareholders of

the listed company after deducting

non-recurring gains and losses (RMB)

3167896.46 190686.95 1561.31%

Net cash flow arising from operating

activities (RMB)

21200212.24 45194220.56 -53.09%

Basic earnings per share (RMB/Share) 0.0112 0.0091 23.08%

Diluted earnings per share (RMB/Share) 0.0112 0.0091 23.08%

Weighted average ROE 0.96% 0.79% 0.17%

Period-end Period-end of last year

Changes over period-end

of last year (+ -)

Total assets (RMB) 610602250.47 614163899.86 -0.58%

Net assets attributable to shareholder of

listed company (RMB)

332593647.44 329428049.89 0.96%

V. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under either IAS (International

Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

2. Difference of the net profit and net assets disclosed in financial report under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under either foreign accounting rules or

Chinese GAAP (Generally Accepted Accounting Principles) in the period.

VI. Items and amounts of extraordinary profit (gains)/loss

√Applicable □ Not applicable

In RMB

Item Amount Note

Gains/losses from the disposal of non-current asset (including

the write-off that accrued for impairment of assets)

-99867.53

Gains/losses from entrusted investment or assets management 66780.40

Other non-operating income and expenditure except for the

aforementioned items

37897.68

Less: Impact on income tax 7109.46

Total -2298.91 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss explain reasons

□ Applicable √Not applicable

In reporting period the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to

the Public --- Extraordinary Profit/loss

Section III. Summary of Company Business

I. Main businesses of the company in the reporting period

After years of development the company has gradually formed two main businesses in industry and property

management. Among them the industrial business mainly includes injection molding POLYLON (light-weight

packaging materials) and complete machine production and sales of liquid crystal display property management

business is mainly the lease of its own property.II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets No major changes

Fixed assets No major changes

Intangible assets No major changes

Construction in progress No major changes

2. Main overseas assets

□ Applicable √ Not applicable

III. Core competitiveness analysis

All industrial lands of the Company located in Shenzhen were taken into the first batch of plan under 2010

Shenzhen urban upgrade planning. In the future development and operation of self-owned land resources would

become the income source of the Company on a long-term and stable basis.深圳中恒华发股份有限公司 2020 年半年度报告全文

Section IV. Discussion and Analysis of Operation

I. Introduction

After years of development the company has gradually formed two main businesses in industry and property management. Among

them the industrial business mainly includes injection molding POLYLON (light-weight packaging materials) and complete

machine production and sales of liquid crystal display property management business is mainly the lease of its own property.

Affected by the outbreak of COVID-19 in the first half of 2020 the company achieved operation revenue of 300.7034 million yuan

with a y-o-y declined of 11.35%; operation profit of 3.9651 million yuan a y-o-y growth of 34.29%; net profit achieved 3.1656

million yuan a y-o-y growth of 22.68%. The operation revenue from industry production has 281.1885 million yuan a 11.79%

down from a year earlier operation profit has 987300 yuan loss a declined of 158.28% on a y-o-y basis net profit has 824100 yuan

loss with a 150.38% down on a y-o-y basis. In property lease business operation revenue achieved 18.7013 million yuan in first half

of the year a 6.22% increased over same period last year operation profit achieved 4.9531 million yuan a y-o-y growth of 292..85%

the net profit achieved 3.9904 million yuan a y-o-y growth of 321.94%.II. Main business analysis

See the “I-Introduction” in “Discussion and Analysis of Operation”

Change of main financial data on a y-o-y basis

In RMB

Current period Same period last year y-o-y changes(+-) Reasons

Operation revenue 300703421.38 339190174.05 -11.35%

Operation cost 263959652.63 297580208.34 -11.30%

Sales expenses 9100079.39 9130380.22 -0.33%

Administrative

expenses

17082362.66 19616991.39 -12.92%

Financial expenses 3484228.81 5068371.24 -31.26%

Short-term loans

declined in the period

Income tax expenses 837369.58 603910.08 38.66%

Profit from property

increased in the period

R&D investment 2423425.26 3726992.86 -34.98%

Orders from new

products declined in

the period

Net cash flow from

operating activities

21200212.24 45194220.56 -53.09%

Return of sales

declined due to the

COVID-19

Net cash flow from

investment activities

-1338379.56 -3964794.99 66.24%

Production equipment

have changed last

period

Net cash flow from

financing activities

-34838186.71 -32459238.76 -7.33%

Net increase of cash

and cash equivalent

-14832093.81 8869836.86 -267.22%

Return of sales

declined due to the

COVID-19

Major changes on profit composition or profit resources in reporting period

□ Applicable √ Not applicable

No major changes on profit composition or profit resources occurred in reporting period

深圳中恒华发股份有限公司 2020 年半年度报告全文

Constitution of operation revenue

In RMB

Current period Same period last year

y-o-y changes(+-)

Amount

Ratio in operation

revenue

Amount

Ratio in operation

revenue

Total operation

revenue

300703421.38 100% 339190174.05 100% -11.35%

According to industries

Video 163278927.45 54.30% 164964344.94 48.63% 5.67%

Injection molding 85278752.42 28.36% 111142622.51 32.77% -4.41%

EPS 19908274.02 6.62% 34292527.88 10.11% -3.49%

Property leasing 18701335.82 6.22% 18911444.99 5.58% 0.64%

Income from

materials

12121666.69 4.03% 7710873.76 2.27% 1.76%

Utilities and others 1414464.98 0.47% 2168359.97 0.64% -0.17%

According to products

Display 163278927.45 54.30% 164964344.94 48.63% 5.67%

Injection molding 85278752.42 28.36% 111142622.51 32.77% -4.41%

EPS 19908274.02 6.62% 34292527.88 10.11% -3.49%

Property leasing 18701335.82 6.22% 18911444.99 5.58% 0.64%

Income from

materials

12121666.69 4.03% 7710873.76 2.27% 1.76%

Utilities and others 1414464.98 0.47% 2168359.97 0.64% -0.17%

According to region

Hong Kong

Taiwan

105186479.34 34.98% 63962270.03 18.86% 16.12%

Central China 136683631.65 45.45% 166693597.80 49.14% -3.69%

East China 39318383.66 13.08% 88099858.28 25.97% -12.89%

South China 19514926.73 6.49% 20434447.94 6.02% 0.47%

About the industries products or regions accounting for over 10% of the company’s operating income or operating profit

√Applicable □ Not applicable

In RMB

Operation

revenue

Operation cost

Gross profit

ratio

Increase/decrea

se of operation

revenue y-o-y

Increase/decrea

se of operation

cost y-o-y

Increase/decrea

se of gross

profit ratio

y-o-y

According to industries

Video 163278927.45 152549452.35 6.57% -1.02% -2.75% 1.65%

Injection

molding

85278752.42 78749817.82 7.66% -23.27% -19.11% -4.75%

EPS 19908274.02 18424496.75 7.45% -41.95% -41.10% -1.34%

Property

leasing

18701335.82 2040226.11 89.09% -1.11% -35.68% 5.86%

深圳中恒华发股份有限公司 2020 年半年度报告全文

According to products

Display 163278927.45 152549452.35 6.57% -1.02% -2.75% 1.65%

Injection

molding

85278752.42 78749817.82 7.66% -23.27% -19.11% -4.75%

EPS 19908274.02 18424496.75 7.45% -41.95% -41.10% -1.34%

Property

leasing

18701335.82 2040226.11 89.09% -1.11% -35.68% 5.86%

According to region

Hong Kong

Taiwan

105186479.34 98581390.01 6.28% 64.45% 63.55% 0.52%

Central China 124089406.22 114338203.97 7.86% -21.63% -18.90% -3.10%

East China 39318383.66 36804172.94 6.39% -55.37% -56.30% 1.99%

South China 18573020.49 2040226.11 89.02% -1.79% -35.68% 5.79%

Under circumstances of adjustment in reporting period for statistic scope of main business data adjusted main business based on

latest one year’s scope of period-end

□ Applicable √ Not applicable

Reasons for y-o-y relevant data with over 30% changes

√Applicable □ Not applicable

Item 2020-6-30 2020-1-1 y-o-y

changes(+-)

Reasons of changes

Monetary fund

25894233.18 38095501.00 -32.03%

Sales declined and the return of sales

decreased

Other current assets

234014.36 1395071.36 -83.23%

Tax to be deducted for the current

period

Long-term deferred

expenses

193613.23 309781.15 -37.50%

Amortization of cloud service fee

Short-term loans

- 24633898.20 -100.00%

Pay back the short-term loans to the

bank

Note payable

8617287.25 16761590.51 -48.59%

Issuance of notes decreased in the

Period

Account received in

advance

866746.45 356446.21 143.16%

Part of the customer deposit is

received in advance

Including: dividend

payable

- 89365.28 -100.00%

Pay back the short-term loans to the

bank

Deferred income

4173180.00 2331720.00 78.97%

Government subsidy related to assets

received in the Period

Item

Jan.- Jun. 2020 Jan.- Jun. 2019

y-o-y

changes(+-)

Reasons of changes

R&D expenses

2423425.26 3726992.86 -34.98%

R&D investment declined in the

Period

Financial expenses 3484228.81 5068371.24 -31.26% Pay back the short-term loans to the

深圳中恒华发股份有限公司 2020 年半年度报告全文

bank

Other income

348540.00 -

Subsidy revenue was recognized in

the Period

Income from assets

disposal

-99867.53 129039.57 -177.39%

Loss from assets disposal in the

Period

Non-operation revenue

45200.06 232758.00 -80.58%

Outstanding enterprise award last

period

Non-operation

expenditure

7302.38 1100.00 563.85%

Liquidated damages incurred in the

Period

Income tax expenses

837369.58 603910.08 38.66%

Profit from property increased in the

Period

Item Jan.- Jun. 2020 Jan.- Jun. 2019 y-o-y

changes(+-)

Reasons of changes

Cash paid for

purchasing fixed assets

intangible assets and

other long-term assets

1816159.96 4360231.13 -58.35%

Last period Zhongzhou new

workshop purchased production

equipment

Cash received from

borrowings

6725056.80 61315748.80 -89.03%

Pay back the short-term loans in the

Period

Cash pay for debts

37370812.20 88051864.63 -57.56%

Pay back the short-term loans in the

Period

Cash paid for dividend

and profit distribution or

interest payment

4192431.31 5723122.93 -26.75%

Pay back the short-term loans in the

Period

Impact on cash and cash

equivalent from change

of foreign exchange

144260.22

99650.05

-44.77%

The effect of exchange rate

fluctuation in the Period

III. Analysis of the non-main business

√Applicable □Not applicable

In RMB

Amount Ratio in total profit Description of formation Whether be sustainable

Investment

income

66780.40 1.67%

Revenue from short-term

financial products

Non-operation

revenue

45200.06 1.13%

Revenue from handling

charge

Non-operation

expense

7302.38 0.18%

The liquidated damages

paid

IV. Assets and liability

1. Major changes of assets composition

In RMB

Period-end Period-end last year Ratio

changes

Notes of major changes

Amount Ratio in Amount Ratio in

深圳中恒华发股份有限公司 2020 年半年度报告全文

total

assets

total

assets

Monetary fund 25894233.18 4.24% 47981541.61 7.69% -3.45%

Account

receivable

162983895.27 26.69% 149540866.46 23.97% 2.72%

Inventory 70058031.39 11.47% 86709541.76 13.90% -2.43%

Investment real

estate

48088827.43 7.88% 49817157.72 7.98% -0.10%

Long-term

equity

investment

0.00% 0.00% 0.00%

Fixed assets 196754132.05 32.22% 185008101.52 29.65% 2.57%

Construction in

process

500000.00 0.08% 7552776.46 1.21% -1.13%

Short-term

loans

134676280.00 21.58% -21.58%

Long-term

loans

67000000.00 10.97% 10.97%

2. Assets and liability measured by fair value

□ Applicable √ Not applicable

3. Assets right restriction till end of reporting period

Item Ending book value Restriction reasons

Monetary fund

4081265.38

Bank acceptance deposit:2529797.38 yuan;

court freeze: 1551468 yuan

Receivable financing 9294702.94 Pledge

Investment real estate 36260337.64 Mortgage to obtain bank loans

Fixed assets 12779094.73 Mortgage to obtain bank loans

Disposal of fixed assets 92857471.69 Court seizure

Intangible assets 2761798.94 Mortgage to obtain bank loans

Total 158034671.32 --

V. Investment analysis

1. Overall situation

□ Applicable √ Not applicable

2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable

3. The major non-equity investment doing in the reporting period

□ Applicable √ Not applicable

4.Financial assets measured by fair value

□ Applicable √ Not applicable

深圳中恒华发股份有限公司 2020 年半年度报告全文

5. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

The Company has no securities investment in the Period.

(2) Derivative investment

□ Applicable √ Not applicable

The Company has no derivatives investment in the Period.VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable

The Company had no sales of major assets in the reporting period.

2. Sales of major equity

□ Applicable √ Not applicable

VII. Analysis of main holding company and stock-jointly companies

√Applicable □ Not applicable

Particular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company

name

Type

Main

business

capital

Total

assets

Net Assets

Operating

revenue

Operatin

g profit

Net profit

Hengfa

Technolog

y Company

Subsidiary

R&D

production

and sales

of the

products as

well as

import &

export

business

etc.

18164311

1.00

46714628

2.12

22232962

2.80

28118849

4.65

-987280

.78

-824054.38

Huafa

Property

Company

Subsidiary

Leasing

and

manageme

nt of own

property

1000000.

8014037.

-1289292.

2794404.

103972

7.42

1042065.26

HUAFA

Lease

Company

Subsidiary

Leasing

and

manageme

nt of own

property

1000000.

1900692.

-5026990.

HUAFA

Hengtian

Company

Subsidiary

Leasing

and

manageme

nt of own

property

1000000.

995061.88 995061.88 0.00 -393.10 -393.10

深圳中恒华发股份有限公司 2020 年半年度报告全文

HUAFA

Hengtai

Company

Subsidiary

Leasing

and

manageme

nt of own

property

1000000.

996097.86 996097.86 0.00 -393.05 -393.05

Particular about subsidiaries obtained or disposed in report period

□Applicable √ Not applicable

Explanation of main holding company and stock-jointly companies

Nil

VIII. Structured vehicle controlled by the Company

□ Applicable √Not applicable

IX. Prediction of business performance from January – September 2020

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the

warning of its material change compared with the corresponding period of the last year and explanation on reason

□ Applicable √ Not applicable

X. Risks and countermeasures

1. Operational risks of industrial business: industrial restructuring fluctuations in raw material prices decline in

market demand and frustration of new product promotion.

Countermeasures: continue to open up the market maintain the existing customers positively develop new

customers and continue to improve production efficiency;

2. Financial risks: large demands for funds substantial increase or decrease in financial costs caused by exchange

rate fluctuations and bank credit constraints caused by changes in financial costs and so on.

Countermeasures: pay close attention to macroeconomic policy trends actively expand the financing channels and

industrial upgrading establish a virtuous circle mechanism for funds improve the service efficiency and use

financial instruments to avoid exchange rate risks.深圳中恒华发股份有限公司 2020 年半年度报告全文

Section V. Important Events

I. In the report period the Company held annual shareholders’ general meeting and

extraordinary shareholders’ general meeting

1. Annual Shareholders’ General Meeting in the report period

Session of meeting Type

Ratio of investor

participation

Date Date of disclosure

Index of

disclosure

2020 First

Extraordinary

General Meeting

of Shareholders

Extraordinary

general meeting

6.26% 2020-02-11 2020-02-12

http://www.cninfo.com.cn/new/disclo

sure/detail?stockC

ode=000020&ann

ouncementId=120

7302289&orgId=g

ssz0000020&anno

uncementTime=20

20-02-12

Annual General

Meeting of 2019

AGM 48.03% 2020-05-21 2020-05-22

http://www.cninfo.com.cn/new/disclo

sure/detail?stockC

ode=000020&ann

ouncementId=120

7845176&orgId=g

ssz0000020&anno

uncementTime=20

20-05-22

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √Not applicable

II. Profit distribution plan in the period and capitalizing of common reserves plan

□ Applicable √Not applicable

The Company plans not to distribute cash dividend and bonus for the semi-annual and no capitalizing of common reserves either.III. Commitments that the actual controller shareholders related party offeror and

committed party as the Company etc. have fulfilled during the reporting period and have not

yet fulfilled by the end of reporting period

□ Applicable √ Not applicable

There are no commitments that the committed party as the actual controller shareholders related party buyer and the Compan y have

fulfilled during the reporting period and have not yet fulfilled by the end of reporting period

深圳中恒华发股份有限公司 2020 年半年度报告全文

IV. Appointment and non-reappointment (dismissal) of CPA

Whether the financial report has been audited or not

□Yes √no

The company's semi-annual report has not been audited.

V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion”

that issued by CPA

□ Applicable √Not applicable

VI. Explanation from the Board for “Qualified Opinion” of last year’s

□ Applicable √Not applicable

VII. Bankruptcy reorganization

□ Applicable √Not applicable

No bankruptcy reorganization for the Company in reporting period

VIII. Lawsuits

Significant lawsuits and arbitration

√Applicable □Not applicable

The basic

situation of

litigation

(Arbitration)

Amount of

money

involved (in

10 thousand

Yuan)

Predicted

liabilities

(Y/N)

Advances

litigation

(Arbitrati

on)

The results and

effects of

litigation

(Arbitration)

Execution of

the litigation

(Arbitration)

Disclosure

date

Disclosur

e index

In September

2016 Wuhan

Zhongheng

Group Co. Ltd.and the

Company and

Shenzhen Vanke

were applied for

arbitration due to

the dispute caseof “Contract forthe Cooperative

Operation of the

Old Projects at

Huafa Industrial

Park Gongming

Street

Guangming New

District”.

46460 No

Ruling on

16 August

2017; put

forward

the

applicatio

n for

dismantli

ng by the

Company

and

controllin

sharehold

er the

applicatio

n was

rejected

by the

court

Found more in

announcement

of the Company

Implementing 2018-02-09

http://ww

w.cninfo.com.cn/c

ninfo-new

/disclosur

e/szse_ma

in/bulletin

_detail/tru

e/120440

6606?ann

ounceTim

e=2018-0

2-09 ；

http://ww

w.cninfo.com.cn/n

ew/disclo

sure/detai

l?plate=sz

se&stock

Code=00

0020&an

nounceme

ntId=120

深圳中恒华发股份有限公司 2020 年半年度报告全文

5326846

&announ

cementTi

me=2018

-08-25

http://ww

w.cninfo.com.cn/n

ew/disclo

sure/detai

l?stockCo

de=00002

0&annou

ncementI

d=120541

8798&org

Id=gssz0

000020&

announce

mentTime

=2018-09

-07

In March 2016

the Company

and HUAFA

Science &

Technology suit

against the

companies

including

Shenzhen

Huayongxing

Environmental

Technology Co.Ltd. Shenzhen

Guangyong

Breadboard Co.

Ltd. Shenzhen

Mingyi

Electronic Co.

Ltd. Shenzhen

Ouruilai

Technology Co.

1964.92 No

The

judgment

of 2

trial

has been

issued

and has

applied

for

compulso

execution

Ended Ended 2016-09-14

http://ww

w.cninfo.com.cn/c

ninfo-new

/disclosur

e/szse_ma

in/bulletin

_detail/tru

e/120270

2423?ann

ounceTim

e=2016-0

07:41

深圳中恒华发股份有限公司 2020 年半年度报告全文

Ltd and

Shenzhen

Kangzhengxin

Technology Co.Ltd. for arrears

of rent. and

refuse to move

the site forcibly

occupied switch

board room and

other power unit

under the name

of the Company

In March 2016

the Company

and HUAFA

Property suit

against Shenzhen

Huayongxing

Environmental

Technology Co.Ltd. and

Shenzhen

Yidaxin

Technology Co.Ltd. for contract

violation and

refuse to move

the site

947.26 No

The

second

trial

decides

the

Company

wins the

lawsuit on

15 March

2018 and

has

applied

for

enforcem

ent

Implementing Implementing 2016-09-14

http://ww

w.cninfo.com.cn/c

ninfo-new

/disclosur

e/szse_ma

in/bulletin

_detail/tru

e/120270

2423?ann

ounceTim

e=2016-0

07:41

Application for

arbitration in

case of contract

dispute between

the V&T

(Shenzhen) Law

Firm and

Shenzhen

Zhongheng

Huafa Co. Ltd.and Wuhan

Zhongheng

Group

1940.2 No

Arbitratio

n has

been

heard for

adjudicati

A ruling has

been issued and

the company

filed an

application for

revocation

In trial 2018-11-14

http://ww

w.cninfo.com.cn/n

ew/disclo

sure/detai

l?plate=sz

se&stock

Code=00

0020&an

nounceme

ntId=120

5602053

&announ

cementTi

me=2018

深圳中恒华发股份有限公司 2020 年半年度报告全文

-11-14

http://ww

w.cninfo.com.cn/n

ew/disclo

sure/detai

l?stockCo

de=00002

0&annou

ncementI

d=120588

0594&org

Id=gssz0

000020&

announce

mentTime

=2019-03

-06

http://ww

w.cninfo.com.cn/n

ew/disclo

sure/detai

l?stockCo

de=00002

0&annou

ncementI

d=120711

1414&org

Id=gssz0

000020&

announce

mentTime

=2019-11

-25

Shenzhen

Zhongheng

Huafa

Technology Co.Ltd sued the

Company and

controlling

shareholder

Wuhan

5200 No

The court

has

opened a

hearing

Found more in

announcement

of the Company

In trial 2020-04-21

http://ww

w.cninfo.com.cn/n

ew/disclo

sure/detai

l?stockCo

de=00002

0&annou

ncementI

深圳中恒华发股份有限公司 2020 年半年度报告全文

Zhongheng New

Science &

Technology

Industrial Group

Co. Lt for the

dispute of assets

replacement

contract

d=120754

0113&org

Id=gssz0

000020&

announce

mentTime

=2020-04

-21

Other lawsuits

□Applicable √ Not applicable

IX. Major litigation and arbitration of the controlling shareholder

China Merchants Securities Asset Management Co. Ltd. (hereinafter referred to as CMAM) sued the Wuhan Zhongheng Group toThe Shenzhen Intermediate Peoples Court (hereinafter referred to as Shenzhen Intermediate Court) against “dispute over repurchaseof pledged securities” CMAM changed the litigious claims later and the case referred to the Guangdong Higher People’s Court

( hereinafter referred to as Guangdong Higher Court) a verdict has yet to be issued. Found more in the Notice on major litigation and

arbitration of the controlling shareholder (Notice No.: 2019-25) released on 5 September 2019 website on

http://www.cninfo.com.cn/new/disclosure/detail?plate=szse&orgId=gssz0000020&stockCode=000020&announcementId=12068891

79&announcementTime=2019-09-05

X. Media questioning

□Applicable √Not applicable

During the reporting period the company had no media generally questioned matters.

XI. Penalty and rectification

□Applicable √ Not applicable

The Company has no penalty and rectification in the period

XII. Integrity of the company and its controlling shareholders and actual controllers

□ Applicable √Not applicable

XIII. Implementation of the company’s stock incentive plan employee stock ownership plan

or other employee incentives

□ Applicable √Not applicable

The Company had no stock incentive plan employee stock ownership plan or other employee incentive in the reporting period.XIV. Major related transaction

1. Related transaction with routine operation concerned

√Applicable □ Not applicable

Relate

party

Relati

onshi

Type

relate

transa

ction

Conte

nt of

relate

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ction

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princi

ple

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ction

price

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transa

ction

amou

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thousa

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rtion

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ctions

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limit

appro

ved

(in 10

thousa

Yuan)

Whet

her

over

the

appro

ved

limite

d or

not

(Y/N)

Cleari

form

for

relate

transa

ction

Availa

ble

simila

marke

t price

Date

disclo

sure

Inde

x of

discl

osur

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深圳中恒华发股份有限公司 2020 年半年度报告全文

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深圳中恒华发股份有限公司 2020 年半年度报告全文

unce

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Total -- --

1868

4.55

7163

1.04

-- -- -- -- --

Detail of sales return with major

amount involved

N/A

Report the actual implementation

of the daily related transactions

which were projected about their

total amount by types during the

reporting period (if applicable)

In the reporting Hengfa Technology purchased LCD display screen from HK Yutian with

US$ 9.5617 million approximately 47.81% of the annual amount predicted at the

beginning of the year; purchased LCD display screen from Hengsheng Photo-electricity

with US $ 4.9161 million approximately 24.58% of the annual amount predicted at the

beginning of the year; purchasing LCD from Hengsheng Photoelectricity with about US

$ 3.6022 million 15.01% of the annual amount predicted at the beginning of the year; sold

LCD whole machine to HK Yutian with US $ 8.3686 million approximately 20.92% of

the annual amount predicted at the beginning of the year. Sold LCD to Hengsheng

Photo-electricity with US $ 1.4543 million approximately 11.63% of the annual amount

predicted at the beginning of the year; the sales of LCD glass to Hengsheng

Photo-electricity amounted to approximately US$ 0.3751 million accounting for 15.63%

of the total amount expected at the beginning of the year.Reasons for major differences

between trading price and market

reference price (if applicable)

Not applicable

2. Related transactions by assets acquisition and sold

□Applicable √ Not applicable

No above-mentioned transactions occurred

3. Main related transactions of mutual investment outside

□ Applicable √Not applicable

No main related transactions of mutual investment outside for the Company in reporting period.

4. Contact of related credit and debt

□ Applicable √Not applicable

No contact of related credit and debt in the period

5. Other related transactions

□ Applicable √Not applicable

The Company had no other significant related transactions in reporting period.XV. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.深圳中恒华发股份有限公司 2020 年半年度报告全文

XVI. Significant contract and implementations

1. Trusteeship contract and leasing

(1) Trusteeship

□ Applicable √Not applicable

No trusteeship for the Company in reporting period

(2) Contract

□ Applicable √Not applicable

No contract for the Company in reporting period

(3) Leasing

□ Applicable √Not applicable

No leasing for the Company in reporting period

2. Major guarantees

√Applicable □ Not applicable

(1) Guarantees

In 10 thousand Yuan

The company and its subsidiaries' external guarantees (Barring the guarantee for subsidiaries)

Name of the

Company

guaranteed

Announc

ement

disclosur

e date

Guarante

e limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implem

ented

(Y/N)

Guaran

tee for

party

(Y/N)

Guarantee of the Company and the subsidiaries

Name of the

Company

guaranteed

Announc

ement

disclosur

e date

Guarante

e limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implem

ented

(Y/N)

Guaran

tee for

party

(Y/N)

Wuhan Hengfa

Technology Co.Ltd.

2020-04-

30000

Joint

liability

guarantee

One year N Y

Total amount of approving

guarantee for subsidiaries in

report period (B1)

30000

Total amount of actual

occurred guarantee for

subsidiaries in report period

(B2)

Total amount of approved

guarantee for subsidiaries at

the end of reporting period

(B3)

30000

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(B4)

Guarantee of the subsidiaries for the subsidiaries

Name of the

Company

guaranteed

Announc

ement

disclosur

e date

Guarante

e limit

Actual date of

happening

Actual

guarantee

limit

Guarantee

type

Guarantee

term

Implem

ented

(Y/N)

Guaran

tee for

party

(Y/N)

深圳中恒华发股份有限公司 2020 年半年度报告全文

Total amount of guarantee of the Company (total of three abovementioned guarantee)

Total amount of approving

guarantee in report period

(A1+B1+C1)

30000

Total amount of actual

occurred guarantee in report

period (A2+B2+C3)

Total amount of approved

guarantee at the end of report

period (A3+B3+C2)

30000

Total balance of actual

guarantee at the end of

report period (A4+B4+C4)

Including:

Explanations on possibly bearing joint and several

liquidating responsibilities for undue guarantees (if

applicable)

N/A

Explanations on external guarantee against regulated

procedures (if applicable)

N/A

Explanation on compound guarantee

Nil

(2) Guarantee outside against the regulation

□Applicable √ Not applicable

No guarantee outside against the regulation in Period.

3. Trust financing

√Applicable □Not applicable

In 10 thousand Yuan

Type Capital sources Amount occurred Outstanding balance Overdue amount

Bank financial

products

Own funds 3500 0 0

Total 3500 0 0

Details of the single major amount or high-risk trust investment with low security poor fluidity and non-guaranteed

□Applicable √Not applicable

Entrust financial expected to be unable to recover the principal or impairment might be occurred

□ Applicable √ Not applicable

4. Other material contracts

□ Applicable √Not applicable

No other material contracts for the Company in reporting period.XVII. Social responsibility

1. Material environmental protection

The listed Company and its subsidiary whether belong to the key sewage units released from environmental protection department

Listed companies and their subsidiaries do not belong to key pollutant discharge units announced by environmental protection

departments.

2. Execution of social responsibility of targeted poverty alleviation

(1) Targeted poverty alleviation

(2) Summary of targeted poverty alleviation

(3) Performance of the targeted poverty alleviation

Index Unit of Quantity /implementation

深圳中恒华发股份有限公司 2020 年半年度报告全文

measure

I. Overall condition —— ——

II. Poverty alleviation by items —— ——

1.Industry development —— ——

2.Shift employment —— ——

3. Relocating in other places —— ——

4. Education —— ——

5. Health —— ——

6.Ecological protection —— ——

7. Reveal all the details —— ——

8. Society —— ——

9.Other —— ——

III. Award received (content and grade) —— ——

(4) Follow-up targeted poverty alleviation scheme

XVIII. Explanation on other significant events

√Applicable □ Not applicable

(1) The Company signed Asset Exchange Contract with Wuhan Zhongheng New Science & Technology Industrial Group

Co. Ltd. (Hereinafter referred to as "Wuhan Zhongheng Group") on 29 April 2009 (details were referred to in the

announcement dated 30 April 2009) and pursuant to the contract since part of the assets of the Company (namely

two parcel of industrial lands located at Huafa road Gongming town Guangming new district Shenzhen (the

property certificate No. were SFDZ No.7226760 and SFDZ No.7226763 No. of parcels were A627-005

andA627-007 and the aggregate area was 48200 sq.m) were the lands listed in the first batch of plan for 2010

Shenzhen urbanization unit planning preparation plan. For promotion of such urbanization project and joint

cooperation the Company has not completed the transfer procedures in respect of the aforesaid land.The Company convoked the first extraordinary meeting of the Board in 2015 on February 16 2015 and the first

extraordinary general meeting of the Board in 2015 on March 4 2015 which considered and approved the“Motion on promoting and implementing the urban renewal project for the renewal units of Huafa area atGongming street Guangming new district Shenzhen” specified that the Company and Wuhan Zhongheng Group

shall obtain the corresponding compensatory consideration for removal from the respectively owned project plots

and the respectively contributed and constructed above-ground buildings before the land development it is

estimated that the compensatory consideration obtained by the Company accounts for 50.5% of the total

consideration and Wuhan Zhongheng Group accounts for 49.5% by calculation.The sixth extraordinary meeting of the board of directors in 2015 and the third extraordinary general meeting haveconsidered and adopted the “Proposal on the project promotion and implementation of urban renewal and theprogress of related transactions of ‘the updated units at Huafa Area Gong Ming Street Guangming New DistrictShenzhen’” the company has signed the “Agreement on the cooperation of urban renewal project of the updatedunits at Huafa Area Gong Ming Street Guangming New District Shenzhen” “Contract for the cooperativeventure of reconstruction project for Huafa Industrial Park Gong Ming Street Guangming New District” and

“Agreement on housing acquisition and removal compensation and resettlement” with Wuhan Zhongheng Group

Shenzhen Vanke Real Estate Co. Ltd. (hereinafter referred to as “Shenzhen Vanke”) and Shenzhen Vanke

深圳中恒华发股份有限公司 2020 年半年度报告全文

Guangming Real Estate Development Co. Ltd. (hereinafter referred to as “Vanke Guangming”).

On 12 September 2016 Shenzhen Vanke applied for arbitration in respect of “Agreement on the cooperation ofurban renewal project of the updated units at Huafa Area Gong Ming Street Guangming New District Shenzhen”

against the Company and Wuhan Zhongheng Group. Shenzhen Court of International Arbitration (SCIA) has

given a ruling in August 2017. On August 29 2018 the court accepted the compulsory execution application of

Shenzhen Vanke. In October 2019 as a number of outsiders filed an “execution objection” and applied for “noexecution” to Shenzhen Intermediate People’s Court the Shenzhen Intermediate People’s Court ruled to terminate

the enforcement procedure on March 20 2020. If the “execution objection” and “no execution” proposed by

outsiders are rejected according to law Shenzhen Vanke may continue to apply to the Shenzhen Intermediate

People’s Court to resume execution. Progress of the case found more in the Notices released on Juchao website

(www.cninfo.com.cn) dated 14 Sept. 2016 1 Nov. 2016 16 Nov. 2016 on 18 Feb. 2017 24 March 2017 25 April

2017 1 July 2017 18 August 2017 9 Feb. 2018 25 Aug. 2018 and 7 Sept. 2018 respectively.

In November 2019 the company was listed by Shenzhen Intermediate People’s Court as the dishonest person

subjected to execution and was removed from the dishonest person subjected to execution list by the ShenzhenIntermediate People’s Court in December 2019. For details see the “Announcement About the Company BeingIncluded in the List of Dishonest Person Subjected to Execution” (Announcement No.: 2019-33) and

“Announcement About the Company Being Removed from the List of Dishonest Person Subjected to Execution”

(Announcement No.: 2019 -35) issued by the company on November 9 2019 and December 14 2019 on

www.cninfo.com.cn.

(2) On 31 December 2015 the 88750047 shares held by Wuhan Zhongheng Group are pledge to China

Merchants Securities Assets Co. Ltd. with due date of 31 December 2016. on 1 Feb. 2016 Wuhan Zhongheng

Group pledge the 27349953 shares held to China Merchants Securities Assets Co. Ltd. with due date of 31

December 2016. The above-mentioned pledged shares are deferred by Wuhan Zhongheng Group; pledge expired

on 31 December 2017. The trading day for repurchase put off to the date when pledge actually removed. Till end

of this period released controlling shareholder still not removed the pledge and the Company has apply by letter

relevant Notice of Presentment on Stock Pledge from Controlling Shareholder was released. Found more in notice

released on Juchao website (www.cninfo.com.cn) date 2 Feb. 2018.

(3) The controlling shareholder Wuhan Zhongheng Group holds 119289894 shares of the Company’ stock

accounting for 42.13% of the total share capital of the Company of which 116489894 shares were judicially frozen

by Shenzhen Intermediate People's Court (hereinafter referred to as "Shenzhen Intermediate Court") on September

27 2016 which were frozen again by the Shenzhen Intermediate People's Court on December 14 2018 with a

frozen period of 36 months; the remaining 2800000 shares were frozen by the Shenzhen Intermediate People's

Court on May 29 2019 and were frozen again by the Higher People’s Court of Guangdong Province on July 5

2019. For details please refer to the company’s announcements published on www.cninfo.com.cn on October 27

2016 January 11 2019 May 31 2019 and August 7 2019.

(4) On September 29 2016 the company and its controlling shareholder Wuhan Zhongheng Group signed the

“Agency Contract” with V&T Law Firm. On October 8 2016 the three parties also signed the “Supplemental

Agreement for Agency Contract” it was agreed that V&T acted as an agent for the company and Wuhan

深圳中恒华发股份有限公司 2020 年半年度报告全文

Zhongheng Group to deal with the arbitration case with Shenzhen Vanke. After losing the lawsuit due to

differences in the payment of attorney fees V&T sued our company and Wuhan Zhongheng Group to the

Shenzhen Court of International Arbitration and applied to the court to seize a bank account under our company’sname and part of our company dormitories please refer to “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement Numbers: 2018-43 2019-02) released by our company on

www.cninfo.com on November 14 2018 and March 6 2019. 02. In November 2019 the Shenzhen Court of

International Arbitration ruled that the company and Wuhan Zhongheng Group paid the corresponding fees.

According to the “Agency Contract” and “Supplemental Agreement for Agency Contract” signed by the three

parties the loss of the arbitrament in this case was borne by Wuhan Zhongheng Group so it had no impact on thecompany’s 2019 annual profit. For details see the company’s “Other Announcements on the Progress InvolvingLitigation and Arbitration” (Announcement No.: 2019-34) released on www.cninfo.com.cn on November 25

2019.

(5) On April 29 2009 the company signed an Asset Replacement Contract with Wuhan Zhongheng Group.

According to the contract the company would use the the land use rights of two plots of land located at Huafa

Road Gongming Town Bao’an District Shenzhen i.e. land parcel number A627-0005 (real estate registration

number 8000101219) and A627-0007 (real estate registration number 8000101218) which are worth 18.55

million yuan to increase capital to Shenzhen Zhongheng Huafa Technology Co. Ltd. (hereinafter referred to as

"Huafa Technology") and transfer ownership to Huafa Technology Wuhan Zhongheng Group replaced the

company's 100% equity in Huafa Technology with its 56% equity in Wuhan Hengfa Technology Co. Ltd.. For the

main content of the above-mentioned Asset Replacement Contract please refer to the Announcement on Related

Transactions of Asset Replacement with Controlling Shareholders published by the company on cninfo on April

30 2009 with the announcement number 2009-17. After Wuhan Zhongheng Group fulfilled its obligations under

the Asset Replacement Contract the company transferred 100% of its equity in Huafa Technology to Wuhan

Zhongheng Group on December 21 2009; the company also handed over the above two plots of land to Huafa

Technology for possession management and use but the land use right has not been transferred to Huafa

Technology. In April 2020 the company received a court summons Huafa Technology sued the company

demanding that the company transfer the above two plots of land and compensate economic losses of 52 million

yuan. As of the disclosure date of this report the case has not yet been decided.XIX. Significant event of subsidiary of the Company

□ Applicable √Not applicable

深圳中恒华发股份有限公司 2020 年半年度报告全文

Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

In Share

Before the Change Increase/Decrease in the Change (+ -) After the Change

Amount Proportion

New

issued

Bonus

Capital

ization

public

reserve

Othe

Subto

tal

Amount

Proportio

I. Restricted shares 0 0.00% 0 0.00%

II. Unrestricted shares 283161227 100.00% 283161227 100.00%

1. RMB Ordinary

181165391 63.98% 181165391 63.98%

2. Domestically listed

foreign shares

101995836 36.02% 101995836 36.02%

III. Total shares 283161227 100.00% 283161227 100.00%

Reasons for share changed

□ Applicable √ Not applicable

Approval of share changed

□ Applicable √ Not applicable

Ownership transfer of share changed

□ Applicable √ Not applicable

Progress of shares buy-back

□ Applicable √ Not applicable

Implementation progress of the reduction of repurchases shares by centralized bidding

□ Applicable √ Not applicable

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common

shareholders of Company in latest year and period

□ Applicable √ Not applicable

Other information necessary to disclose or need to disclosed under requirement from security regulators

□ Applicable √ Not applicable

2. Changes of restricted shares

□ Applicable √Not applicable

II. Securities issuance and listing

□ Applicable √Not applicable

III. Amount of shareholders of the Company and particulars about shares holding

In Share

Total common stock

shareholders in reporting

period-end

24154

Total preference shareholders

with voting rights recovered at

end of reporting period (if

applicable) (found in note 8)

Particulars about common shares held above 5% by shareholders or top ten common shareholders

深圳中恒华发股份有限公司 2020 年半年度报告全文

Full name of

Shareholders

Nature of

shareholder

Proportio

n of

held

Total

commo

shareho

lders at

the end

report

period

Changes

in report

period

Amount

restricte

commo

n shares

held

Amount

un-restric

ted

common

held

Number of share

pledged/frozen

State of

Amount

Wuhan

Zhongheng

Group

Domestic

non-state-owned

legal person

42.13%

119289

894

0 0

1192898

Pledged 116100000

Frozen 119289894

SEG (HONG

KONG) CO.

LTD.

Overseas legal

person

5.85%

16569

560

0 0

1656956

Pledged 0

Frozen 0

GOOD

HOPE

CORNER

INVESTME

NTS LTD

Overseas legal

person

3.43%

97220

0 9722000

Pledged 0

Frozen 0

Changjiang

Securities

Brokerage

(Hong Kong)

Co. Ltd.

Overseas legal

person

1.89%

53552

0 5355249

Pledged 0

Frozen 0

Guoyuan

Securities

Brokerage

(Hong Kong)

Co. Ltd.

Overseas legal

person

1.37%

38701

0 3870117

Pledged 0

Frozen 0

Li Zhongqiu

Overseas nature

person

1.00%

28300

0 2830000

Pledged 0

Frozen 0

Zhong

Jiachao

Domestic nature

person

0.47%

13296

0 1329602

Pledged 0

Frozen 0

China

Merchants

Securities

Hong Kong

Limited

State-owned

legal person

0.39%

11132

0 1113288

Pledged 0

Frozen 0

LI SHERYN

ZHAN MING

Overseas nature

person

0.38%

10740

0 1074000

Pledged 0

Frozen 0

Li Senzhuang

Domestic nature

person

0.36%

10177

0 1017773

Pledged 0

Frozen 0

Strategy investors or general N/A

深圳中恒华发股份有限公司 2020 年半年度报告全文

corporation comes top 10

shareholders due to rights issue (if

applicable) (see note 3)

Explanation on associated

relationship among the aforesaid

shareholders

Among the top ten shareholders Li Zhongqiu is the actual controller of Wuhan Zhongheng

New Science & Technology Industrial Group Co. Ltd. and is a party acting in concert. The

Company neither knew whether there exists associated relationship among the other

tradable shareholders nor they belong to consistent actors that are prescribed in Measures

for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies.Particular about top ten shareholders with un-restrict common shares held

Shareholders’ name

Amount of un-restrict common shares held at

Period-end

Type of shares

Type Amount

Wuhan Zhongheng Group 119289894

RMB common

119289894

SEG (HONG KONG) CO. LTD. 16569560

Domestically

listed foreign

16569560

GOOD HOPE CORNER

INVESTMENTS LTD

9722000

Domestically

listed foreign

9722000

Changjiang Securities Brokerage

(Hong Kong) Co. Ltd.

5355249

Domestically

listed foreign

5355249

Guoyuan Securities Brokerage

(Hong Kong) Co. Ltd.

3870117

Domestically

listed foreign

3870117

Li Zhongqiu 2830000

Domestically

listed foreign

2830000

Zhong Jiachao 1329602

RMB common

1329602

China Merchants Securities Hong

Kong Limited

1113288

Domestically

listed foreign

1113288

LI SHERYN ZHAN MING 1074000

Domestically

listed foreign

1074000

Li Senzhuang 1017773

Domestically

listed foreign

1017773

Expiation on associated

relationship or consistent actors

within the top 10 un-restrict

common shareholders and

between top 10 un-restrict

Among the top ten shareholders Li Zhongqiu is the actual controller of Wuhan Zhongheng

New Science & Technology Industrial Group Co. Ltd. and is a party acting in concert. The

Company neither knew whether there exists associated relationship among the other

tradable shareholders nor they belong to consistent actors that are prescribed in Measures

for the Administration of Disclosure of Shareholder Equity Changes of Listed Companies.深圳中恒华发股份有限公司 2020 年半年度报告全文

common shareholders and top 10

shareholders

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back

agreement dealing in reporting period

□ Yes √ No

The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no

buy-back agreement dealing in reporting period.IV. Change of controlling shareholder or actual controller

Changes of controlling shareholders in reporting period

□ Applicable √Not applicable

The Company had no changes of controlling shareholders in reporting period

Changes of actual controller in reporting period

□ Applicable √Not applicable

No changes of actual controllers for the Company in reporting period.深圳中恒华发股份有限公司 2020 年半年度报告全文

Section VII. Preferred Stock

□ Applicable √Not applicable

The Company had no preferred stock in the Period.深圳中恒华发股份有限公司 2020 年半年度报告全文

Section VIII. Convertible Bonds

□ Applicable √ Not applicable

The Company had no convertible bonds in the Period.深圳中恒华发股份有限公司 2020 年半年度报告全文

Section IX. Particulars about Directors Supervisors and Senior

Officers

I. Changes of shares held by directors supervisors and senior officers

□ Applicable √ Not applicable

Shares held by directors supervisors and senior officers have no changes in reporting period found more details in Annual Report

2019.

II. Resignation and dismissal of directors supervisors and senior officers

□ Applicable √ Not applicable

The directors supervisors and senior management of the company did not change during the reporting period found more details in

Annual Report 2019.

深圳中恒华发股份有限公司 2020 年半年度报告全文

Section X. Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when

semi-annual report approved for released or fail to cash in full on due

深圳中恒华发股份有限公司 2020 年半年度报告全文

Section XI. Financial Report

I. Audit report

Whether the semi-annual report was audited or not

□ Yes √ No

The financial report of this semi-annual report was un-audited

II. Financial statement

Currency used in note of financial statement is RMB (Yuan)

1. Consolidated Balance Sheet

Prepared by SHENZHEN ZHONGHENG HUAFA CO. LTD

2020-06-30

In RMB

Item 2020-6-30 2019-12-31

Current assets:

Monetary funds 25894233.18 38095501.00

Settlement provisions

Capital lent

Tradable financial assets

Derivative financial assets

Note receivable

Account receivable 162983895.27 138755691.43

Receivable financing 29776291.10 42096834.02

Accounts paid in advance 22083401.55 23007637.46

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance

receivable

Other account receivable 4804531.82 6351361.16

Including: Interest receivable

Dividend receivable

Buying back the sale of financial

assets

Inventories 70058031.39 66971551.96

Contractual assets

Assets held for sale

Non-current asset due within one

year

Other current assets 234014.36 1395071.36

Total current assets 315834398.67 316673648.39

Non-current assets:

Loans and payments on behalf

Debt investment

Other debt investment

深圳中恒华发股份有限公司 2020 年半年度报告全文

Long-term account receivable

Long-term equity investment

Investment in other equity

instrument

Other non-current financial

assets

Investment real estate 48088827.43 48952992.57

Fixed assets 196754132.05 198229817.31

Construction in progress 500000.00

Productive biological asset

Oil and gas asset

Right-of-use assets

Intangible assets 42056797.73 42968600.44

Expense on Research and

Development

Goodwill

Long-term expenses to be

apportioned

193613.23 309781.15

Deferred income tax asset 6948781.36 6803360.00

Other non-current asset 225700.00 225700.00

Total non-current asset 294767851.80 297490251.47

Total assets 610602250.47 614163899.86

Current liabilities:

Short-term loans 24633898.20

Loan from central bank

Capital borrowed

Trading financial liability

Derivative financial liability

Note payable 8617287.25 16761590.51

Account payable 140297671.23 108804905.20

Accounts received in advance 866746.45 356446.21

Contractual liability

Selling financial asset of

repurchase

Absorbing deposit and interbank

deposit

Security trading of agency

Security sales of agency

Wage payable 4280621.68 5877341.25

Taxes payable 12568567.03 12877944.98

Other account payable 28140118.39 28027592.62

Including: Interest payable 89365.28

Dividend payable

深圳中恒华发股份有限公司 2020 年半年度报告全文

Commission charge and

commission payable

Reinsurance payable

Liability held for sale

Non-current liabilities due

within one year

12000000.00 12000000.00

Other current liabilities

Total current liabilities 206771012.03 209339718.97

Non-current liabilities:

Insurance contract reserve

Long-term loans 67000000.00 73000000.00

Bonds payable

Including: Preferred stock

Perpetual capital

securities

Lease liability

Long-term account payable

Long-term wages payable

Accrual liability 64411.00 64411.00

Deferred income 4173180.00 2331720.00

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 71237591.00 75396131.00

Total liabilities 278008603.03 284735849.97

Owner’s equity:

Share capital 283161227.00 283161227.00

Other equity instrument

Including: Preferred stock

Perpetual capital

securities

Capital public reserve 146587271.50 146587271.50

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus public reserve 77391593.25 77391593.25

Provision of general risk

Retained profit -174546444.31 -177712041.86

Total owner’ s equity attributable to

parent company

332593647.44 329428049.89

Minority interests

Total owner’ s equity 332593647.44 329428049.89

Total liabilities and owner’ s equity 610602250.47 614163899.86

深圳中恒华发股份有限公司 2020 年半年度报告全文

Legal representative: Li Zhongqiu

Person in charge of accounting works: Yang Bin

Person in charge of accounting institution: Wu Aijie

2. Balance Sheet of Parent Company

In RMB

Item 2020-6-30 2019-12-31

Current assets:

Monetary funds 3898679.16 3494245.90

Trading financial assets

Derivative financial assets

Note receivable

Account receivable

Receivable financing

Accounts paid in advance 71888.56

Other account receivable 95507010.91 97165023.85

Including: Interest receivable

Dividend

receivable

Inventories 14806.50 14806.50

Contractual assets

Assets held for sale

Non-current assets maturing

within one year

Other current assets 173950.26

Total current assets 99492385.13 100848026.51

Non-current assets:

Debt investment

Other debt investment

Long-term receivables

Long-term equity investments 186608900.00 186608900.00

Investment in other equity

instrument

Other non-current financial

assets

Investment real estate 24562099.74 25166301.06

Fixed assets 97873874.16 98410024.38

Construction in progress 500000.00

Productive biological assets

Oil and natural gas assets

Right-of-use assets

Intangible assets 4469157.57 4553709.24

深圳中恒华发股份有限公司 2020 年半年度报告全文

Research and development costs

Goodwill

Long-term deferred expenses

Deferred income tax assets 7367646.35 7367646.35

Other non-current assets

Total non-current assets 321381677.82 322106581.03

Total assets 420874062.95 422954607.54

Current liabilities

Short-term borrowings

Trading financial liability

Derivative financial liability

Notes payable

Account payable 9740367.33 10745840.16

Accounts received in advance 64745.01 57266.01

Contractual liability

Wage payable 820979.02 1220979.02

Taxes payable 7498209.68 8489130.72

Other accounts payable 22460372.88 19100375.42

Including: Interest payable

Dividend payable

Liability held for sale

Non-current liabilities due

within one year

12000000.00 12000000.00

Other current liabilities

Total current liabilities 52584673.92 51613591.33

Non-current liabilities:

Long-term loans 67000000.00 73000000.00

Bonds payable

Including: preferred stock

Perpetual capital

securities

Lease liability

Long-term account payable

Long term employee

compensation payable

Accrued liabilities 64411.00 64411.00

Deferred income

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 67064411.00 73064411.00

Total liabilities 119649084.92 124678002.33

Owners’ equity:

Share capital 283161227.00 283161227.00

深圳中恒华发股份有限公司 2020 年半年度报告全文

Other equity instrument

Including: preferred stock

Perpetual capital

securities

Capital public reserve 146587271.50 146587271.50

Less: Inventory shares

Other comprehensive income

Special reserve

Surplus reserve 77391593.25 77391593.25

Retained profit -205915113.72 -208863486.54

Total owner’s equity 301224978.03 298276605.21

Total liabilities and owner’s equity 420874062.95 422954607.54

3. Consolidated Profit Statement

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Total operating income 300703421.38 339190174.05

Including: Operating income 300703421.38 339190174.05

Interest income

Insurance gained

Commission charge and

commission income

II. Total operating cost 297053804.80 336433054.05

Including: Operating cost 263959652.63 297580208.34

Interest expense

Commission charge and

commission expense

Cash surrender value

Net amount of expense of

compensation

Net amount of withdrawal of

insurance contract reserve

Bonus expense of guarantee slip

Reinsurance expense

Tax and extras 1004056.05 1310110.00

Sales expense 9100079.39 9130380.22

Administrative expense 17082362.66 19616991.39

R&D expense 2423425.26 3726992.86

Financial expense 3484228.81 5068371.24

Including: Interest

expenses

4018202.27 5355676.92

Interest

income

11856.69 419336.28

Add: other income 348540.00

深圳中恒华发股份有限公司 2020 年半年度报告全文

Investment income (Loss is

listed with “-”)

66780.40 74936.14

Including: Investment

income on affiliated company and joint

venture

The termination of

income recognition for financial assets

measured by amortized cost(Loss is

listed with “-”)

Exchange income (Loss is

listed with “-”)

Net exposure hedging

income (Loss is listed with “-”)

Income from change of fair

value (Loss is listed with “-”)

Loss of credit impairment

(Loss is listed with “-”)

-8432.50

Losses of devaluation of

asset (Loss is listed with “-”)

Income from assets disposal

(Loss is listed with “-”)

-99867.53 129039.57

III. Operating profit (Loss is listed with

“-”)

3965069.45 2952663.21

Add: Non-operating income 45200.06 232758.00

Less: Non-operating expense 7302.38 1100.00

IV. Total profit (Loss is listed with “-”) 4002967.13 3184321.21

Less: Income tax expense 837369.58 603910.08

V. Net profit (Net loss is listed with

“-”)

3165597.55 2580411.13

(i) Classify by business continuity

1.continuous operating net profit(net loss listed with ‘-”)

3165597.55 2580411.13

2.termination of net profit (netloss listed with ‘-”)

(ii) Classify by ownership

1.Net profit attributable to

owner’s of parent company

3165597.55 2580411.13

2.Minority shareholders’ gains

and losses

VI. Net after-tax of other

comprehensive income

Net after-tax of other comprehensive

income attributable to owners of parent

深圳中恒华发股份有限公司 2020 年半年度报告全文

company

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1.Changes of the defined

benefit plans that re-measured

2.Other comprehensive

income under equity method that

cannot be transfer to gain/loss

3.Change of fair value of

investment in other equity instrument

4.Fair value change of

enterprise's credit risk

5. Other

(ii) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

1.Other comprehensive

income under equity method that can

transfer to gain/loss

2.Change of fair value of

other debt investment

3.Amount of financial

assets re-classify to other

comprehensive income

4.Credit impairment

provision for other debt investment

5.Cash flow hedging

reserve

6.Translation differences

arising on translation of foreign

currency financial statements

7.Other

Net after-tax of other comprehensive

income attributable to minority

shareholders

VII. Total comprehensive income 3165597.55 2580411.13

Total comprehensive income

attributable to owners of parent

Company

3165597.55 2580411.13

Total comprehensive income

attributable to minority shareholders

VIII. Earnings per share:

(i) Basic earnings per share 0.0112 0.0091

深圳中恒华发股份有限公司 2020 年半年度报告全文

(ii) Diluted earnings per share 0.0112 0.0091

Enterprise combine under the same control in the Period the combined party realized net profit of 0 Yuan before combination and

realized 0 Yuan at last period for combined party

Legal representative: Li Zhongqiu

Person in charge of accounting works: Yang Bin

Person in charge of accounting institution: Wu Aijie

4. Profit Statement of Parent Company

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Operating income 16720522.47 18041135.31

Less: Operating cost 2040226.11 3172031.59

Taxes and surcharge 542709.33 562061.05

Sales expenses

Administration expenses 6208200.98 9024394.50

R&D expenses

Financial expenses 4015977.09 4423699.05

Including: interest

expenses

4018202.27 4398333.30

Interest income 6881.46 9938.10

Add: other income

Investment income (Loss is

listed with “-”)

Including: Investment

income on affiliated Company and

joint venture

The termination of

income recognition for financial

assets measured by amortized cost

(Loss is listed with “-”)

Net exposure hedging

income (Loss is listed with “-”)

Changing income of fair

value (Loss is listed with “-”)

Loss of credit impairment

(Loss is listed with “-”)

Losses of devaluation of

asset (Loss is listed with “-”)

Income on disposal of

assets (Loss is listed with “-”)

II. Operating profit (Loss is listed

with “-”)

3913408.96 858949.12

深圳中恒华发股份有限公司 2020 年半年度报告全文

Add: Non-operating income 17754.80 1300.00

Less: Non-operating expense

III. Total Profit (Loss is listed with

“-”)

3931163.76 860249.12

Less: Income tax 982790.94 215062.28

IV. Net profit (Net loss is listed with

“-”)

2948372.82 645186.84

(i)continuous operating netprofit (net loss listed with ‘-”)

2948372.82 645186.84

(ii) termination of net profit (netloss listed with ‘-”)

V. Net after-tax of other

comprehensive income

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1.Changes of the defined

benefit plans that re-measured

2.Other comprehensive

income under equity method that

cannot be transfer to gain/loss

3.Change of fair value of

investment in other equity instrument

4.Fair value change of

enterprise's credit risk

5. Other

(II) Other comprehensive

income items which will be

reclassified subsequently to profit or

loss

1.Other comprehensive

income under equity method that can

transfer to gain/loss

2.Change of fair value of

other debt investment

3.Amount of financial

assets re-classify to other

comprehensive income

4.Credit impairment

provision for other debt investment

5.Cash flow hedging

reserve

6.Translation differences

arising on translation of foreign

深圳中恒华发股份有限公司 2020 年半年度报告全文

currency financial statements

7.Other

VI. Total comprehensive income 2948372.82 645186.84

VII. Earnings per share:

(i) Basic earnings per share 0.0104 0.0023

(ii) Diluted earnings per share 0.0104 0.0023

5. Consolidated Cash Flow Statement

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor

services

251602049.92 283565570.88

Net increase of customer deposit

and interbank deposit

Net increase of loan from

central bank

Net increase of capital borrowed

from other financial institution

Cash received from original

insurance contract fee

Net cash received from

reinsurance business

Net increase of insured savings

and investment

Cash received from interest

commission charge and commission

Net increase of capital borrowed

Net increase of returned business

capital

Net cash received by agents in

sale and purchase of securities

Write-back of tax received

Other cash received concerning

operating activities

3743255.21 3403272.55

Subtotal of cash inflow arising from

operating activities

255345305.13 286968843.43

Cash paid for purchasing

commodities and receiving labor

service

179132887.12 182811441.04

Net increase of customer loans

and advances

深圳中恒华发股份有限公司 2020 年半年度报告全文

Net increase of deposits in

central bank and interbank

Cash paid for original insurance

contract compensation

Net increase of capital lent

Cash paid for interest

commission charge and commission

Cash paid for bonus of

guarantee slip

Cash paid to/for staff and

workers

24991943.90 33770584.01

Taxes paid 3743185.15 4582072.62

Other cash paid concerning

operating activities

26277076.72 20610525.20

Subtotal of cash outflow arising from

operating activities

234145092.89 241774622.87

Net cash flows arising from operating

activities

21200212.24 45194220.56

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

Cash received from investment

income

66780.40 74936.14

Net cash received from disposal

of fixed intangible and other

long-term assets

411000.00 320500.00

Net cash received from disposal

of subsidiaries and other units

Other cash received concerning

investing activities

35000000.00 49000000.00

Subtotal of cash inflow from

investing activities

35477780.40 49395436.14

Cash paid for purchasing fixed

intangible and other long-term assets

1816159.96 4360231.13

Cash paid for investment

Net increase of mortgaged loans

Net cash received from

subsidiaries and other units obtained

Other cash paid concerning

investing activities

35000000.00 49000000.00

Subtotal of cash outflow from

investing activities

36816159.96 53360231.13

深圳中恒华发股份有限公司 2020 年半年度报告全文

Net cash flows arising from investing

activities

-1338379.56 -3964794.99

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Including: Cash received from

absorbing minority shareholders’

investment by subsidiaries

Cash received from loans 6725056.80 61315748.80

Other cash received concerning

financing activities

Subtotal of cash inflow from

financing activities

6725056.80 61315748.80

Cash paid for settling debts 37370812.20 88051864.63

Cash paid for dividend and

profit distributing or interest paying

4192431.31 5723122.93

Including: Dividend and profit

of minority shareholder paid by

subsidiaries

Other cash paid concerning

financing activities

Subtotal of cash outflow from

financing activities

41563243.51 93774987.56

Net cash flows arising from financing

activities

-34838186.71 -32459238.76

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

144260.22 99650.05

V. Net increase of cash and cash

equivalents

-14832093.81 8869836.86

Add: Balance of cash and cash

equivalents at the period -begin

36645061.61 27961209.60

VI. Balance of cash and cash

equivalents at the period -end

21812967.80 36831046.46

6. Cash Flow Statement of Parent Company

In RMB

Item 2020 semi-annual 2019 semi-annual

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor

services

17825898.30 16386026.55

深圳中恒华发股份有限公司 2020 年半年度报告全文

Write-back of tax received

Other cash received concerning

operating activities

7210631.17 4240814.47

Subtotal of cash inflow arising from

operating activities

25036529.47 20626841.02

Cash paid for purchasing

commodities and receiving labor

service

Cash paid to/for staff and

workers

2100854.64 1551291.30

Taxes paid 1790646.36 791510.74

Other cash paid concerning

operating activities

11480046.39 25327205.64

Subtotal of cash outflow arising from

operating activities

15371547.39 27670007.68

Net cash flows arising from operating

activities

9664982.08 -7043166.66

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

Cash received from investment

income

Net cash received from disposal

of fixed intangible and other

long-term assets

Net cash received from disposal

of subsidiaries and other units

Other cash received concerning

investing activities

Subtotal of cash inflow from

investing activities

Cash paid for purchasing fixed

intangible and other long-term assets

Cash paid for investment

Net cash received from

subsidiaries and other units obtained

Other cash paid concerning

investing activities

Subtotal of cash outflow from

investing activities

Net cash flows arising from investing

activities

深圳中恒华发股份有限公司 2020 年半年度报告全文

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Cash received from loans

Other cash received concerning

financing activities

Subtotal of cash inflow from

financing activities

Cash paid for settling debts 6000000.00

Cash paid for dividend and

profit distributing or interest paying

3366124.47 4398333.30

Other cash paid concerning

financing activities

Subtotal of cash outflow from

financing activities

9366124.47 4398333.30

Net cash flows arising from financing

activities

-9366124.47 -4398333.30

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

2210.11

V. Net increase of cash and cash

equivalents

301067.72 -11441499.96

Add: Balance of cash and cash

equivalents at the period -begin

2046143.44 12024179.58

VI. Balance of cash and cash

equivalents at the period -end

2347211.16 582679.62

7. Statement of Changes in Owners’ Equity (Consolidated)

This Period

In RMB

Item

2020 semi-annual

Owners’ equity attributable to the parent Company

Min

ority

inter

ests

Tota

own

ers’

equit

Sha

cap

ital

Other

equity

instrument

Capi

tal

reser

Less

Inve

ntor

shar

Othe

com

preh

ensi

inco

Reas

onab

reser

Surp

lus

reser

Prov

ision

gene

ral

risk

Reta

ined

profi

Othe

Subt

otal

Pre

fer

red

sto

Per

pet

ual

cap

ital

sec

urit

ies

her

I. Balance at

the end of the

last year

283

146

587

271.

773

915

93.2

-177

712

041.

329

428

049.

329

428

049.

深圳中恒华发股份有限公司 2020 年半年度报告全文

27.

50 5 86 89 89

Add:

Changes of

accounting

policy

Error

correction of

the last period

Enterprise

combine

under the

same control

Other

II. Balance at

the beginning

of this year

283

27.

146

587

271.

773

915

93.2

-177

712

041.

329

428

049.

329

428

049.

III. Increase/

Decrease in

this year

(Decrease is

listed with

“-”)

316

559

7.55

316

559

7.55

316

559

7.55

(i) Total

comprehensiv

e income

316

559

7.55

316

559

7.55

316

559

7.55

(ii) Owners’

devoted and

decreased

capital

1.Common

invested by

shareholders

2. Capital

invested by

holders of

other equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

4. Other

深圳中恒华发股份有限公司 2020 年半年度报告全文

(III) Profit

distribution

1. Withdrawal

of surplus

reserves

2. Withdrawal

of general

risk

provisions

Distribution

for owners (or

shareholders)

4. Other

(IV) Carrying

forward

internal

owners’

equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus

reserve

4．Carry-over

retained

earnings

from the

defined

benefit

plans

5．Carry-over

retained

earnings from

other

comprehensiv

e income

6. Other

(V)

Reasonable

reserve

1. Withdrawal

in the report

period

深圳中恒华发股份有限公司 2020 年半年度报告全文

2. Usage in

the report

period

(VI)Others

IV. Balance at

the end of the

report period

283

27.

146

587

271.

773

915

93.2

-174

546

444.

332

593

647.

332

593

647.

Last Period

In RMB

Item

2019 semi-annual

Owners’ equity attributable to the parent Company

Mino

rity

intere

sts

Total

owne

rs’

equit

Sha

cap

ital

Other

equity

instrument

Capi

tal

reser

Less

Inve

ntor

shar

Othe

com

preh

ensi

inco

Reas

onab

reser

Surp

lus

reser

Prov

ision

gene

ral

risk

Reta

ined

profi

Othe

Subt

otal

efe

rre

sto

rpe

tua

pit

sec

uri

tie

Oth

I. Balance at

the end of the

last year

283

27.

146

587

271.

773

915

93.2

-183

172

091.

323

968

000.

3239

6800

0.74

Add:

Changes of

accounting

policy

Error

correction of

the last

period

Enterprise

combine

under the

same

control

Other

II. Balance at 283 146 773 -183 323 3239

深圳中恒华发股份有限公司 2020 年半年度报告全文

the beginning

of this year

27.

587

271.

915

93.2

172

091.

968

000.

6800

0.74

III. Increase/

Decrease in

this year

(Decrease is

listed with

“-”)

546

004

9.15

546

004

9.15

5460

049.

(i) Total

comprehensi

ve income

546

004

9.15

546

004

9.15

5460

049.

(ii) Owners’

devoted and

decreased

capital

1.Common

invested by

shareholders

2. Capital

invested by

holders of

other equity

instruments

3. Amount

reckoned into

owners

equity with

share-based

payment

4. Other

(III) Profit

distribution

Withdrawal

of surplus

reserves

Withdrawal

of general

risk

provisions

Distribution

for owners

(or

shareholders)

4. Other

(IV) Carrying

深圳中恒华发股份有限公司 2020 年半年度报告全文

forward

internal

owners’

equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

Remedying

loss with

surplus

reserve

4．Carry-over

retained

earnings

from the

defined

benefit

plans

5．Carry-over

retained

earnings

from other

comprehensi

ve income

6. Other

(V)

Reasonable

reserve

Withdrawal

in the report

period

2. Usage in

the report

period

(VI)Others

IV. Balance

at the end of

the report

period

283

27.

146

587

271.

773

915

93.2

-177

712

041.

329

428

049.

3294

2804

9.89

8. Statement of Changes in Owners’ Equity (Parent Company)

This Period

深圳中恒华发股份有限公司 2020 年半年度报告全文

In RMB

Item

2020 semi-annual

capit

Other equity

instrument

Capita

public

reserv

Less:

Invent

ory

Other

compr

ehensi

incom

Reaso

nable

reserv

Surplu

reserv

Retai

ned

profi

Other

Total

owners’

equity

Prefe

rred

stock

Perp

etual

capit

secur

ities

Othe

I. Balance at

the end of the

last year

2831

6122

7.00

14658

7271.

77391

593.2

-208

863

486.

298276

605.21

Add:

Changes of

accounting

policy

Error

correction of

the last period

Other

II. Balance at

the beginning

of this year

2831

6122

7.00

14658

7271.

77391

593.2

-208

863

486.

298276

605.21

III. Increase/

Decrease in

this year

(Decrease is

listed with “-”)

294

837

2.82

294837

2.82

(i) Total

comprehensive

income

294

837

2.82

294837

2.82

(ii) Owners’

devoted and

decreased

capital

1.Common

invested by

shareholders

2. Capital

invested by

holders of

other equity

instruments

3. Amount

reckoned into

深圳中恒华发股份有限公司 2020 年半年度报告全文

owners equity

with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal

of surplus

reserves

2. Distribution

for owners (or

shareholders)

3. Other

(IV) Carrying

forward

internal

owners’ equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus reserve

4．Carry-over

retained

earnings from

the defined

benefit plans

5．Carry-over

retained

earnings from

other

comprehensive

income

6. Other

(V)

Reasonable

reserve

1. Withdrawal

in the report

period

2. Usage in the

report period

(VI)Others

深圳中恒华发股份有限公司 2020 年半年度报告全文

IV. Balance at

the end of the

report period

2831

6122

7.00

14658

7271.

77391

593.2

-205

9151

13.7

301224

978.03

Last period

In RMB

Item

2019 semi-annual

Shar

capit

Other equity

instrument

Capit

public

reserv

Less:

Invent

ory

Other

compr

ehensi

incom

Reason

able

reserve

Surpl

reserv

Retaine

d profit

Other

Total

owners’

equity

Pref

erre

stoc

Perp

etual

capit

secu

ritie

Othe

I. Balance at

the end of the

last year

283

161

227.

1465

8727

1.50

7739

1593

.25

-21185

5430.4

295284

661.34

Add:

Changes of

accounting

policy

Error

correction of

the last

period

Other

II. Balance at

the beginning

of this year

283

161

227.

1465

8727

1.50

7739

1593

.25

-21185

5430.4

295284

661.34

III. Increase/

Decrease in

this year

(Decrease is

listed with

“-”)

29919

43.87

299194

3.87

(i) Total

comprehensiv

e income

29919

43.87

299194

3.87

(ii) Owners’

devoted and

decreased

capital

1.Common

深圳中恒华发股份有限公司 2020 年半年度报告全文

invested by

shareholders

2. Capital

invested by

holders of

other equity

instruments

3. Amount

reckoned into

owners equity

with

share-based

payment

4. Other

(III) Profit

distribution

Withdrawal

of surplus

reserves

Distribution

for owners

(or

shareholders)

3. Other

(IV) Carrying

forward

internal

owners’

equity

1. Capital

reserves

conversed to

capital (share

capital)

2. Surplus

reserves

conversed to

capital (share

capital)

3. Remedying

loss with

surplus

reserve

4．Carry-over

retained

earnings from

the defined

benefit plans

5．Carry-over

retained

earnings from

深圳中恒华发股份有限公司 2020 年半年度报告全文

other

comprehensiv

e income

6. Other

(V)

Reasonable

reserve

Withdrawal

in the report

period

2. Usage in

the report

period

(VI)Others

IV. Balance at

the end of the

report period

283

161

227.

1465

8727

1.50

7739

1593

.25

-20886

3486.5

298276

605.21

深圳中恒华发股份有限公司 2020 年半年度报告全文

III. Company profile

1. The registration place of the enterprise the form of organization and the headquarters address

Shenzhen Zhongheng HUAFA Company Limited (hereinafter referred to as Company or the Company)

established on 8 December 1981. Uniform social credit code 91440300618830372G.Registered place and head office of the Company: 411 Bldg. Huafa (N) Road Futian District Shenzhen

Legal representative: Li Zhongqiu

Registered capital: RMB 283161227.00

2. The nature of the business and the main business activities

The Company belongs to the computer telecommunication and manufacturing of other electronic equipment.

Business scope: producing and sales of vary color TV set liquid crystal display LCD (operates in branch)

radio-recorder sound equipment electronic watch electronic game and computers the printed wiring board

precision injection parts light packaging material (operates in Wuhan) and hardware (including tool and mould)

for various electronic products and supporting parts plating and surface treatment and tin wire development and

operation of real estate (Shen Fang Di Zi No.: 7226760) and property management. Funded affiliated companies

in Wuhan and Jilin. Setting up branches in capital of the province (Lhasa City excluded) in China and

municipality directly under the central government.

3. Relevant party offering approval reporting of financial statements and date thereof

The financial statement has been deliberated and approved by BOD on 21 August 2020. According to Article of

Association the statement shall be submitted for deliberation in shareholders general meeting.

Consolidate scope in the Period including: subsidiaries including Shenzhen HUAFA Property Lease Management

Co. Ltd (no annual inspection in 2011 and business license revoke on 1 April 2014) Shenzhen Zhongheng

HUAFA Property Co. Ltd Wuhan Hengfa Technology Co. Ltd. Shenzhen HUAFA Hengtian Co. Ltd. and

Shenzhen HUAFA Hengtai Co. Ltd. More of subsidiaries found in “Note VIII. Equity in other subjects”.IV. Preparation basis of Financial Statements

1. Preparation basis

Base on the running continuously and actual transactions and events in line with the Accounting Standards for

Business Enterprise – Basic Standards and specific principle of accounting standards issued by the Ministry of

Finance the Company prepared and formulate the financial statement lies on the followed important accounting

policy and estimation.

2. Going concern

The Company expects that the production and sales will be in a virtuous cycle within 12 months from the end of

he reporting period and there is no risk that affects the continued operations.深圳中恒华发股份有限公司 2020 年半年度报告全文

V. Important accounting policy and estimation

Notes on specific accounting policies and accounting estimation:

The following disclosure has covered the specific accounting policies and accounting estimates formulated by the Company

according to the actual production and operation characteristics.

1. Declaration of obedience to Accounting Standards for Business Enterprise

The Financial Statements of the Company are up to requirements of Accounting Standards for Business Enterprise

and also a true and thorough reflection to the relevant information as the Company’s financial position dated 30th

June 2020 and the operation results as well as cash flow for the first half year of 2020.

2. Accounting period

The Company’s accounting year is Gregorian calendar year namely from 1st January to 31st December of every

year.

3. Business cycle

The Company’s business cycle is one year (12 months) as a normal cycle and the business cycle is the

determining criterion for the liquidity of assets and liabilities of the Company.

4. Bookkeeping standard currency

The Renminbi (RMB) is taken as the book-keeping standard currency.

5. Accounting methods for consolidation of enterprises under the same control or otherwise

1. Consolidation of enterprises under the same control

Where the Company for long term equity investment arising from business combination under common control

satisfies the combination consideration by payment of cash transfer of non-cash assets or assumption of debt the

carrying value of the net assets of the acquire in combined financial statement of the ultimate controller shared by

the Company as at the combination date shall be deemed as the initial investment cost of such long term equity

investment. If the equity instrument issued by combining party are consider as the combination consideration

than the total value of the issuing shares are consider as the share capital. The difference between the initial cost of

long-term equity investment and book value of consideration (or total face value of the shares issued) paid capital

surplus adjusted; if the capital surplus not enough to written down than retained earning adjusted.

2. Business combination not under common control

As for business combination not under common control combination costs refer to the sum of the fair value of the

assets paid liabilities occurred or assumed as well as equity securities issued by the acquirer to obtain control over

the acquire as at the acquisition date. As for acquiree that obtained by consolidation not under the same control

the qualified confirmation of identified assets liability and contingency liabilities should calculated by fair value

on day of purchased. If the consolidation cost larger than the fair value amount of identified net assets from

acquiree’s the differences should be recognized as goodwill. If the consolidation cost less than the fair value

amount of identified net assets from acquiree’s the differences should reckoned into current non-operating

income.深圳中恒华发股份有限公司 2020 年半年度报告全文

6. Preparation methods for consolidated financial statements

1. Consolidation financial statement range

The Company includes all the subsidiaries (including the separate entities controlled by the Company) into

consolidated financial statement including companies controlled by the Company non-integral part of the

investees and structural main body.

2. Centralize accounting policies balance sheet dates and accounting periods of parent and subsidiaries.

As for the inconsistency between the subsidiaries and the Company in the accounting policies and periods the

necessary adjustment is made on the subsidiaries’ financial statements in the preparation of the consolidated

financial statements according to the Company’s accounting policies and periods.

3. Offset of consolidated financial statement

The consolidated financial statements shall be prepared on the basis of the balance sheet of the parent company

and subsidiaries which offset the internal transactions incurred between the parent company and subsidiaries and

within subsidiaries. The owner’s equity of the subsidiaries not attributable to the parent company shall be

presented as minority equity under the owner’s equity item in the consolidated balance sheet. The long term equity

investment of the parent company held by the subsidiaries deemed as treasury stock of the corporate group as

well as the reduction of owners’ equity shall be presented as “Less: treasury stock” under the owners’ equity item

in the consolidated balance sheet.

4. Accounting for acquisition of subsidiary through combination

For subsidiaries acquired under enterprise merger involving enterprises under common control

the assets liabilities operating results and cash flows of the subsidiaries are included in the consolidated financial

statements from the beginning of the financial year in which the combination took place. When

preparing the consolidated financial statements for the subsidiaries acquired from business

combination not involving entities under common control the identifiable net assets of the subsidiaries are

adjusted on the basis of their fair values on the date of acquisition.

5. Accounting treatment of disposal subsidiaries

In the case of partial disposal of long-term equity investments in subsidiaries without loss of control in the

consolidated financial statements the difference between the disposal price and the net asset share corresponding

to the disposal of long-term equity investments and enjoying the subsidiaries’ continued calculation from the

purchase date or the merger date is used to adjust the capital reserve (capital premium or equity premium). If the

capital reserve is insufficient to offset the retained earnings are adjusted.If the control power of the investee is lost due to the disposal of part of the equity investment etc. when preparing

the consolidated financial statements the remaining equity shall be re-measured according to its fair value on the

date of loss of control. The sum of the consideration obtained from the disposal of equity and the fair value of the

深圳中恒华发股份有限公司 2020 年半年度报告全文

remaining equity minus the difference between the share of the original subsidiary’s net assets that should be

continuously calculated from the purchase date or the merger date is included in the current investment income

when the control is lost and also offsets goodwill. Other comprehensive income related to the equity investment of

the original subsidiary is converted into current investment income when the control is lost.

7. Determination criteria of cash and cash equivalent

The cash recognized in the preparation of the cash flow statements is the Company’s storage cash and deposits

available for payment anytime. The cash equivalents recognized in the preparation of the cash flow statements

refers to the investment held by the Company with characteristic of short-term strong mobility easy transfer to

known sum cash and has slim risk from value changes.

8. Foreign currency exchange and the conversion of foreign currency statements

1. Foreign currency exchange

The approximate exchange rate of the spot exchange rate on transaction occurred should be used for standard

money conversion while foreign currency exchange occurred On the balance sheet day the monetary items are

converted on the current rate on the balance sheet day concerning the exchange differences between the spot

exchange rate on that date and initial confirmation or the sport exchange rate on previously balance sheet date

should reckoned in to current gains/losses except the capitalizing on exchange differences for foreign specific

loans which was reckoned into cost for capitalizing. The non-monetary items measured on the historic cost are

still measured by the original bookkeeping rate with the sum of the bookkeeping standard currency unchanged.Items of non-monetary foreign currency which was calculated by fair value should converted by spot exchange

rate on the confirmation day of fair value difference between the converted amount of bookkeeping currency and

original amount of bookkeeping currency was treated as changes of fair value (including exchange rate changed)

reckoned into current gains/losses or recognized as other consolidated income.

2. Conversion of foreign currency financial statements

Upon the conversion of the foreign currency financial statements of the controlling subsidiaries joint enterprises

and the affiliated enterprises on the bookkeeping standard currency different from the Company’s the accounting

check and preparation of the consolidated financial statements are made. Assets and liabilities items in the balance

sheet are converted on the current rate on the balance sheet day; owners’ equity items besides the “retained profit”

item the other items are converted on the actual rate. Items of revenue and expenses in profit statement should

converted by the approximate exchange rate of spot exchange rate on occurring date. The conversion difference of

the foreign currency financial statements is listed specifically in the owners’ equity in the balance sheet. If the

foreign cash flow determined by rational system method the approximate exchange rate of spot exchange rate on

occurring date should prevail. The cash influenced by the rate fluctuation is listed specifically in the cash flow

statement. As for the foreign operation the conversion difference of the foreign currency statement related to the

foreign operation is transferred in proportion into the disposal of the current loss/gain.

9. Financial instrument

1. Category and recognition of financial instrument

Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financial

深圳中恒华发股份有限公司 2020 年半年度报告全文

liability or equity instrument for other units.

(1) Financial assets

The Company classifies financial assets that meet the following conditions as financial assets measured at

amortized cost: ① The Company’s business model for managing financial assets is to collect contractual cash

flows as its goal; ② The contractual terms of the financial assets stipulate that the cash flow generated on a

specific date is only the payment of principal and interest based on the outstanding principal amount.The Company classifies financial assets that meet the following conditions as financial assets measured at fair

value and whose changes are included in other comprehensive income: ① The Company’s business model for

managing financial assets is to collect contractual cash flows and sell the financial assets as its goal; ② The

contractual terms of the financial assets stipulate that the cash flow generated on a specific date is only for the

payment of principal and interest based on the outstanding principal amount

For investment in non-trading equity instruments the Company may irrevocably designate it as a financial asset

measured at fair value and its changes included in other comprehensive income at initial recognition. The

designation is made on the basis of a single investment and the relevant investment meets the definition of equity

instruments from the perspective of the issuer.

Except for financial assets classified as financial assets measured at amortized cost and financial assets measured

at fair value and whose changes are included in other comprehensive income the Company classifies the financial

assets as financial assets measured at fair value and whose changes are included in current profit or loss. At the

initial recognition if the accounting mismatch can be eliminated or reduced the Company can irrevocably

designate the financial asset as a financial asset measured at fair value and its changes are included in the current

profit and loss.When the Company changes the business model for managing financial assets it will reclassify all affected related

financial assets on the first day of the first reporting period after the business model has been changed and will

apply future applicable methods from the date of reclassification for relevant accounting treatment no retroactive

adjustments shall be made for previously recognized gains losses (including impairment losses or gains) or

interest.

(2) Financial liabilities

Financial liabilities are classified as financial liabilities measured at fair value and whose changes are included in

the current profit or loss financial liabilities formed by the transfer of financial assets that does not meet the

conditions for derecognition or continues to be involved in the transferred financial assets and financial liabilities

measured at amortized cost at initial recognition. All financial liabilities are not reclassified.

2. Measurement of financial instruments

The initial recognition of the Company’s financial instruments is measured at fair value. For financial assets and

financial liabilities measured at fair value and whose changes are included in the current profit and loss the

related transaction costs are directly included in the current profit and loss; for other types of financial assets or

financial liabilities the related transaction costs are included in the initial recognition amount. For the accounts

receivable or bills receivable arising from the sale of products or the provision of labor services not containing or

not considering significant financing components the Company shall use the amount of consideration expected to

深圳中恒华发股份有限公司 2020 年半年度报告全文

be received as the initial recognition amount. The subsequent measurement of financial instruments depends on

their classification.

(1) Financial assets

① Financial assets measured at amortized cost. After initial recognition such financial assets are measured at

amortized cost by using the effective interest method. Gains or losses arising from financial assets that are

measured at amortized cost and do not belong to any hedging relationship are included in the current profit or loss

when they are derecognized reclassified amortized in accordance with the effective interest rate method or

recognized for impairment.

② Financial assets measured at fair value and whose changes are included in the current profit and loss. After

initial recognition for such financial assets (except for a part of financial assets that belong to the hedging

relationship) the fair value is used for subsequent measurement and the resulting gains or losses (including

interest and dividend income) are included in the current profit and loss.③ Investment in debt instruments measured at fair value and whose changes are included in other comprehensive

income. After initial recognition the subsequent measurement of such financial assets is conducted at fair value.Interest impairment losses or gains calculated by using the effective interest rate method and the exchange gains

and losses are included in the current profit and loss and other gains or losses are included in other

comprehensive income. In derecognition the accumulated gains or losses previously included in other

comprehensive income are transferred out of other comprehensive income and included in the current profit and

loss.

(2) Financial liabilities

① Financial liabilities measured at fair value and whose changes are included in the current profit and loss. Such

financial liabilities include transactional financial liabilities (including derivatives that belong to financial

liabilities) and financial liabilities designated to be measured at fair value and whose changes are included in the

current profit and loss. After initial recognition the subsequent measurement of such financial liabilities is at fair

value except for those related to hedge accounting gains or losses (including interest expenses) resulting from

changes in the fair value of transactional financial liabilities are included in the current profit and loss. If a

financial liability designated to be measured at fair value and whose changes are included in the current profit or

loss the amount of change in the fair value of the financial liability caused by changes in the enterprise’s own

credit risk is included in other comprehensive income other changes in fair value are included in the current profit

and loss. If the impact of changes in the financial liability’s own credit risk included in other comprehensive

income causes or expands the accounting mismatch in profit or loss the Company will include all gains or losses

on the financial liability in the current profit and loss.

② Financial liabilities measured at amortized cost. After initial recognition such financial liabilities are measured

at amortized cost by using the effective interest method.

3. The Company’s methods for confirming the fair value of financial instruments

If the financial instrument has an active market the fair value is determined by the quoted price in the active

market; if the financial instrument doesn’t have an active market the fair value is determined by adopting the

深圳中恒华发股份有限公司 2020 年半年度报告全文

valuation technique. Valuation techniques mainly include market approach income approach and cost approach.In limited circumstances if the recent information used to determine fair value is insufficient or the range of

possible estimated amounts of fair value is widely distributed and the cost represents the best estimate of fair

value within this range the cost may represent the appropriate estimates of fair value within this distribution range.The Company uses all information on the performance and operation of the investee gettable after the initial

recognition date to determine whether the cost represents the fair value or not.

4. Confirmation basis and measurement method for the transfer of liabilities of financial assets

(1)Financial assets

If the Company’s financial asset meets one of the following conditions it shall be terminated for confirmation:

①The contract right to receive the cash flow of the financial asset is terminated; ② The financial asset has been

transferred and the Company has transferred almost all risks and rewards of ownership of the financial asset; ③

The financial asset has been transferred although the Company has neither transferred nor retained almost all the

remuneration in the ownership of the financial asset it has not retained control of the financial asset.If the Company neither transfers nor retains almost all the remuneration in the ownership of financial assets and

retains control over the financial assets the relevant financial assets are recognized according to the extent that

they continue to be involved in the transferred financial assets and the related liabilities are accordingly

recognized.If the transfer of financial assets meets the conditions for derecognition the difference between the following two

amounts shall be included in the current profit and loss: ① The book value of the transferred financial assets on

the date of derecognition; ② The sum of the consideration received for the transfer of financial assets and the

amount corresponding to the derecognized part of the cumulative amount of changes in fair value that was directly

included in other comprehensive income (the financial assets involved in the transfer are classified as financial

assets measured at fair value and their changes are included in other comprehensive income).If partial transfer of financial assets satisfies the conditions for derecognition the book value of the transferred

financial assets as a whole is apportioned respectively according to the relative fair value on the transfer date

between the derecognition portion and the non- derecognition portion and then the difference of following two

amounts is included in the current profit and loss: ①The book value of the derecognition part on the derecognition

date; ②The sum of the consideration received in the derecognition part and the amount corresponding to the

derecognized part of the cumulative amount of changes in fair value that was directly included in other

comprehensive income (the financial assets involved in the transfer are classified as financial assets measured at

fair value and their changes are included in other comprehensive income).

(2) Financial liability

If the current obligation of the financial liability (or part of it) has been discharged the Company derecognizes the

financial liability (or part of the financial liability).深圳中恒华发股份有限公司 2020 年半年度报告全文

If the financial liability (or part of it) is derecognized the Company shall include the difference between its book

value and the consideration paid (including non-cash assets transferred out or liabilities assumed) into the current

profit and loss.

10.Note receivable

Found more in 11.Account receivable

11.Account receivable

1. How to determine expected credit losses

Based on expected credit losses the Company makes impairment accounting treatment and confirm loss

provisions for financial assets (including receivables) measured at amortized cost and financial assets (including

receivables financing) that are measured at fair value and whose changes are included in other comprehensive

income and lease receivables.The Company assesses on each balance sheet date whether the credit risk of relevant financial instruments has

increased significantly since initial recognition and divides the process of credit impairment of financial

instruments into three stages and adopts different accounting treatment methods for financial instruments

impairment at different stages: (1) In the first stage if the credit risk of a financial instrument has not increased

significantly since its initial recognition the Company shall measure the loss provisions according to the expected

credit losses of the financial instrument in the next 12 months and calculate the interest income according to its

book balance (i.e. without deducting impairment) and actual interest rate; (2) In the second stage if the credit risk

of a financial instrument has increased significantly since the initial recognition but no credit impairment has

occurred the Company shall measure the loss provisions according to the expected credit losses of the financial

instrument during the entire duration and calculate the interest income according to its book balance and actual

interest rate; (3) In the third stage if the credit impairment occurs after initial recognition the Company shall

measure loss provisions based on the expected credit losses of the financial instrument for the entire duration and

calculate the interest income according to its book balance and actual interest rate.

(1) Methods of measuring loss provisions for financial instruments with lower credit risk

For financial instruments with lower credit risk on the balance sheet date the Company can directly make the

assumption that the credit risk of the instrument has not increased significantly since the initial recognition

without comparing with the credit risk at the initial recognition.If the default risk of financial instruments is low the debtor’s ability to fulfill its contractual cash flow obligations

is strong in the short term and even if there are adverse changes in the economic situation and operating

environment over a long period of time it may not necessarily reduce the borrower’s ability to fulfill the

contractual cash flow obligations the financial instrument shall be considered to have lower credit risk.

(2) Methods of measuring loss provisions for accounts receivable and lease receivables

①Receivables that do not contain significant financing components. For the receivables formed by transactions

regulated by “Accounting Standards for Business Enterprises No.14-Revenue” and without containing significant

financing components the Company adopts a simplified method that is it always calculates the loss provisions

based on the expected credit losses for the entire duration.深圳中恒华发股份有限公司 2020 年半年度报告全文

Based on the nature of financial instruments the Company assesses whether credit risk has increased significantly

on the basis of individual financial assets or financial assets portfolios. The Company divides the notes receivable

and accounts receivable into several portfolios based on the characteristics of credit risk and calculates the

expected credit losses on the basis of the portfolios the basis for determining the portfolios is as follows:

Accounts receivable portfolio 1: A portfolio that uses the aging of accounts receivables as credit risk

characteristics

Accounts receivable portfolio 2: Combination of related parties included in the scope of consolidated statements

Notes receivable portfolio 1: Same as the division of accounts receivable portfolio

Notes receivable portfolio 2: Management evaluates that this type of fund is bank acceptance portfolio with lower

credit risk

For the accounts receivable and notes receivable being divided into portfolio 1 the Company refers to the

historical credit loss experience combines with the current conditions and the prediction of future economic

situation and prepares a comparison table of the aging of accounts receivable and the expected credit loss rate of

the entire duration and calculates the expected credit losses.

For accounts receivable and notes receivable being divided into portfolio 2 the Company refers to historical credit

loss experience combines with the current conditions and the predictions of future economic conditions and

calculates the expected credit losses of 0% through default risk exposure and expected credit loss rate for the

entire duration.

②Accounts receivables and leases receivables that contain significant financing components. For accountsreceivables that contain significant financing components and leases receivables regulated by “AccountingStandards for Business Enterprises No. 21-Leases” the Company measures loss provisions in accordance with the

general method that is the “third stage” model.

(3)Accrual method of bad debt provision for those accrual by account age as the portfolio

Account age Expected credit loss rate of receivable (%)

Within one year (one year

included)

1-2 years 5

2-3 years 10

Over 3 years 30

2. Accounting treatment methods of expected credit losses

In order to reflect the changes in the credit risk of financial instruments since initial recognition the Company

remeasures the expected credit losses on each balance sheet date and the resulting increase or reversal of the loss

provisions should be counted as an impairment loss or gain and included in the current profit and loss and based

on the type of financial instrument offsets the book value of the financial asset listed in the balance sheet or

includes in the estimated liability (loan commitment or financial guarantee contract) or includes in other

comprehensive income (debt investments measured at fair value and whose changes are included in other

comprehensive income).深圳中恒华发股份有限公司 2020 年半年度报告全文

12.Receivable financing

Accounts receivable financing reflects the bills receivable and receivables that are measured at fair value on the

balance sheet date and whose changes are included in other comprehensive income for example the company

uses bank acceptance discounts or endorsements as a daily fund management business model then the company

aims to both collect contractual cash flow and sell the bank’s acceptance bill and classifies it as a financial asset

measured at fair value and whose changes are included in other comprehensive income. The occasional bank

acceptance discounts or endorsements not used as a daily fund management business model cannot be classified

as financial assets measured at fair value and whose changes are included in other comprehensive income or be

included in accounts receivable financing.

Accounting treatment reference to the 9.4 Classification recognition basis and measurement method of financial

assets above mentioned

13. Other account receivable

Determination and accounting treatment on the expected credit losses of other account receivable

The Company measures the loss provisions according to the general method that is the “third stage” model.When measuring the credit impairment of financial instruments the Company considers the following factors to

assess whether the credit risk has increased significantly:

The Company divides other receivables into several portfolios based on the nature of the payments and calculates

the expected credit losses on the basis of the portfolio the basis for determining the portfolio is as follows:

Other receivables portfolio 1: Combination of non-related parties that make provision for impairment according to

the expected loss rate

Other receivables portfolio 2: Combination of related parties included in the scope of consolidated statements

For other receivables being divided into portfolio 1 the Company refers to the historical credit loss experience

combines with the current conditions and the prediction of future economic situation and prepares a comparison

table of the aging of accounts receivable and the expected credit loss rate of the entire duration and calculates the

expected credit losses.

For other receivables being divided into portfolio 2 the Company refers to historical credit loss experience

combines with the current conditions and the predictions of future economic conditions and calculates the

expected credit losses of 0% through default risk exposure and expected credit loss rate for the entire duration.

Accrual method of bad debt provision for those accrual by account age as the portfolio

Account age Expected credit loss rate of other receivable (%)

Within one year (one year

included)

1-2 years 5

2-3 years 10

Over 3 years 30

14. Inventory

1. Categories of inventory

深圳中恒华发股份有限公司 2020 年半年度报告全文

The inventory is goods or manufactured products held for sale products in process and materials and matters

utilized in the production or supply of labor. Mainly including raw material revolving materials (wrappage and

low-value consumption goods etc.) outside processing materials goods in process semi-finished goods stocks

and so on.

2. Accounting method for inventory delivery

When inventories are issued the actual cost is determined by the first in first out method.

3. Accrual method inventory falling price reserves

On the balance sheet day the inventory is measured on the lower one between the cost and the net realizable value

and the provision for the falling price reserves is accrued on each inventory item; however as for the inventory of

large quantity and low price the provision is accrued on the inventory category.

4. Inventory system

Inventory system of the Company is perpetual inventory system

5. Amortization method for the low-value consumables and wrap page

Low-value consumables and packages are amortized by one-point method

15. Long-term equity investment

1. Recognition of initial investment cost

For a long-term equity investment obtained by a business combination if it is a business combination under the

same control take the share of the combine party obtained in the book value of the net assets in the consolidated

financial statements of the ultimate controlling party on the combination date as the initial investment cost; in the

case of the consolidation of enterprises not under the same control recognized as the initial cost is the recognized

consolidation cost on the purchase day. As for the long term equity investment obtained by cash payment the

initial investment cost is the actual purchase payment. As for the long term equity investment obtained by the

equity securities offering the initial investment cost is the fair value of the equity securities. As for the long-term

equity investment obtained by debt reorganization initial investment cost of such investment should determine by

relevant regulation of the “Accounting Standards for Business Enterprise No.12- Debt Reorganization”; as for the

long term equity investment obtained by the exchange of the non-monetary assets the initial investment cost isrecognized on the relevant rules in the “Accounting Standards for Business Enterprise No. 7- Exchange ofNon-Monetary Assets”

2. Subsequent measurement and profit or loss recognition

Where the company has a control over the investee long-term equity investments are measured using cost method.Long-term equity investments in associates and joint ventures are measured using equity method. Where part of

the equity investments of an investor in its associates are held indirectly through venture investment institutions

common fund trust companies or other similar entities including investment linked insurance funds such part of

equity investments indirectly held by the investor shall be measured at fair value through profit or loss according

to according to relevant requirements of Accounting Standards for Business Enterprises No.22—Recognition

深圳中恒华发股份有限公司 2020 年半年度报告全文

and measurement of Financial Instruments regardless whether the above entities have significant influence on

such part of equity investments while the remaining part shall be measured using equity method.

3. Basis of conclusion for common control and significant influence over the investee

Joint control over an investee refers to where the activities which have a significant influence on return on certain

arrangement could be decided only by mutual consent of the investing parties sharing the control which includes

the sales and purchase of goods or services management of financial assets acquisition and disposal of assets

research and development activities and financing activities etc.; Significant influence on the investee refers to

that: significant influence over the investee exists when holding more than 20% but less than 50% of the shares

with voting rights or even if the holding is below 20% there is still significant influence if any of the following

conditions is met: there is representative in the board of directors or similar governing body of the investee;

participation in the investee’s policy setting process; assign key management to the investee; the investee relies on

the technology or technical information of the investing company; or major transactions with the investee.

16. Investment real estate

Measurement for investment real estate

Cost method

Depreciation or amortization method

The types of investment real estate of the Company include the leased land use rights leased buildings and land

use rights held and prepared for transfer after appreciation. Investment real estate is initially measured at cost and

subsequently measured by using the cost model.The leased buildings in the Company’s investment property adopts straight-line depreciation to calculate and

distill depreciation specific accounting policy are same as part of the fixed assets. The leased land use rights in

the investment property and the land use rights to be transferred after appreciation adopt straight-line amortization

specific accounting policy are same as part of the intangible assets.

17. Fixed assets

(1) Recognition

Fixed assets refers to the tangible assets holding for purpose of producing goods providing labor services leasing

or operation management which has one accounting fiscal year of using life. Meanwhile as up to the following

conditions they are recognized: the economic interest related to the fixed assets probably flow into the Company;

the cost of the fixed assets can be measured reliably.

(2) Depreciation method

Category Depreciation method Depreciation life (year) Salvage rate

Annual depreciation

rate

House building

Straight-line

depreciation

20-50 10.00 1.80-4.50

Machinery equipment

Straight-line

depreciation

10 10.00 9.00

深圳中恒华发股份有限公司 2020 年半年度报告全文

Mold equipment

Straight-line

depreciation

3 10.00 30.00

Transportation

equipment

Straight-line

depreciation

5 10.00 18.00

Instrument equipment

Straight-line

depreciation

5 10.00 18.00

Tool equipment

Straight-line

depreciation

5 10.00 18.00

Office equipment

Straight-line

depreciation

5 10.00 18.00

The fixed assets of the Company mainly include house and buildings machinery equipment electronic equipment

transportation equipment etc.; the method of depreciation is based on the straight-line method. Determine the

useful life and estimated net residual value of fixed assets according to the nature and use of various types of fixed

assets. At the end of the year review the useful life estimated net residual value and depreciation method of fixed

assets if there is a difference from the original estimate make corresponding adjustments. Except for the fixed

assets that have been fully depreciated and continue to be used and the land that is separately accounted for the

Company calculates and depreciates all fixed assets.

(3) Recognition basis valuation and depreciation method for fixed assets under financing lease

The fixed assets under financing lease are the lease that has substantially transferred all the risks and rewards

associated with asset ownership. The initial valuation of the fixed assets under financing lease is to take the lower

one between the fair value of the leased assets and the present value of the minimum lease payments on the start

date of the lease period as the entry value; the subsequent valuation of the fixed assets under financing lease

adopts the depreciation policy consistent with the own fixed assets to make depreciation and impairment

provision.

18. Construction in process

Construction in process of the Company divided as self-run construction and out-bag construction. The

Construction in process of the Company carried forward as fixed assets while the construction is ready for the

intended use. Criteria of the expected condition for use should apply one of the follow conditions: The substance

construction (installation included) of the fixed assets has completed all or basically; As the projects have been in

test production or operation and the results show that the assets can operate properly and produce the qualified

products stably or the test operation result shows the assets can operate or open properly. The expenditure of the

fixed assets on the construction is a little or little. The fixed assets of the project constructed have been up to the

requirements of the design or contract or basically up to.

19. Borrowing expenses

1. Recognition principle on capitalization of borrowing expenses

As for the Company’s actual borrowing expenses directly attributable to the assets construction or production it is

capitalized and reckoned into the relevant assets cost; as for other borrowing expenses it is recognized on the

actual sum and reckoned into the current loss/gain. The assets up to the capitalization are assets as the capital

assets investment real estate and inventory reaching the expectant availability or sale ability.深圳中恒华发股份有限公司 2020 年半年度报告全文

2. Calculation of the capitalization

Capitalization term: the period from the time starts to capitalization to the time the capitalization ends. The period

of capitalization suspended is not included. The capitalization of borrowing expenses should be suspended while

the abnormal interrupt which surpass three months continuously in the middle of acquisition or construction or

production.

As for the borrowing of the specific borrowing the capitalization sum is recognized on the current actual

interest expenses less the interest income of the borrowing capital not utilized but deposited in the bank or the

return of the temporary investment; As for the appropriation of the general borrowing the capitalization sum is

recognized on the weighted average of the accumulative assets expenditure above the specific borrowing and

times the capitalization rate of the appropriation; As for the discount or premium of the borrowing the discount or

premium to be diluted in every accounting period is recognized in the actual rate method.The effective interest method is the method for the measurement of the diluted discount or premium or interest

expenses on the actual interest rate; and the actual interest rate is the interest rate used in the discount of the future

cash flow in the expectant duration period as the current book value of the borrowing.

20. Intangible assets

(1) Accounting method service life and impairment test

1. Accounting method of intangible assets

The Company’s intangible assets are measured initially on cost. The intangible assets purchased in are taken as the

actual cost on the actual payment and relevant expenditure. As for the intangible assets invested in by the

investors the actual cost is recognized on the value stipulated in the contract or agreement; however if what is

stipulated in the contract or agreement is not fair value the actual cost is recognized on fair value. As for the

self-developed intangible assets their cost is the actual total expenditure before reaching the expectant purpose.The follow-up measurements of the Company’s intangible assets respectively are: the line amortization method is

taken on the intangible assets of finite service life and at the yea-end the check is taken on the service life and

dilution of the intangible assets and the corresponding adjustment is made if there is inconsistency with the

previous expected ones. As for the intangible assets of uncertain service life it is not diluted however the service

life is checked at year-end; If there is solid evidence to its finite service life its service life is estimated and

diluted in straight line method.

2. Judgment basis for uncertain service life

The Company will not be able to foresee the time limit within which the asset brings economic benefits to the

company or the intangible assets with uncertain useful life identified as intangible assets with uncertain useful life.The basis for judging the uncertainty of useful life is from the contractual rights or other legal rights but the

contract stipulates or the law rules there is no definite useful life; combining the same industry case and or the

relevant expert argumentation it is still incapable of judging the time limit within which the intangible assets

深圳中恒华发股份有限公司 2020 年半年度报告全文

bring economic benefits to the company.

At the end of each year review the useful life of intangible assets with indefinite useful life by mainly adopting

the bottom-up method the relevant departments of intangible assets take the basic review and evaluate whether

there is any change in the judgment basis for indefinite useful life.

(2) Accounting policies for internal research and development expenditure

Expenditures for internal research and development projects at the research phase shall be included in the current

profit or loss when incurred; expenditures incurred at the development phase and recognized as intangible assets

shall be transferred to intangible assets accounting.

21. Long-term assets impairment

Long-term equity investments investment properties measured at cost and long-term assets such as fixed assets

construction in progress productive biological assets at cost method oil and gas assets intangible assets and

goodwill are tested for impairment if there is any indication that an asset may be impaired at the balance date. If

the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount

a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying

amount exceeds its recoverable amount.The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future

cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on

the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset the

recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest

group of assets that is able to generate independent cash inflows.Goodwill arising from a business combination is tested for impairment at least at each year end irrespective of

whether there is any indication that the asset may be impaired. For the purpose of impairment testing the carrying

amount of goodwill acquired in a business combination is allocated from the acquisition date on a reasonable

basis to each of the related asset groups; if it is impossible to allocate to the related asset groups it is allocated to

each of the related set of asset groups. If the carrying amount of the asset group or set of asset groups is higher

than its recoverable amount the amount of the impairment loss first reduced by the carrying amount of the

goodwill allocated to the asset group or set of asset groups and then the carrying amount of other assets (other

than the goodwill) within the asset group or set of asset groups pro rata based on the carrying amount of each

asset.Once the impairment loss of such assets is recognized it is not be reversed in any subsequent period.

22. Long-term deferred expenditure

The Company’s long-term deferred expenditure are expenses paid out and with one year above (one-year

excluded) benefit period. The long-term deferred expenses are diluted by periods according to the benefit period.

As the long-term deferred expenses cannot enable the accounting period’s beneficiary all dilution values of the

project undiluted yet are transferred into the current loss/gain.深圳中恒华发股份有限公司 2020 年半年度报告全文

23. Employees remuneration

(1) Accounting for short-term benefits

In the period of employee services short-term benefits are actually recognized as liabilities and charged to profit

or loss or if otherwise required or allowed by other accounting standards to the related costs of assets for the

current period. At the time of actual occurrence The Company’s employee benefits are recorded into the profits

and losses of the current year or assets associated costs according to the actual amount. The non-monetary

employee benefits are measured at fair value. Regarding to the medical and health insurance industrial injury

insurance maternity insurance and other social insurances housing fund and labor union expenditure and

personnel education that the Company paid for employees the Company should recognize corresponding

employees benefits payable according to the appropriation basis and proportion as stipulated by relevant

requirements and recognize the corresponding liabilities and include these expenses in the profits or losses of the

current period or recognized as respective assets costs.

(2) Accounting for post-employment benefits

During the accounting period in which an employee provides service the amount payable calculated under

defined contribution scheme shall be recognized as a liability and recorded in profit and loss of the current period

or in assets. In respect of the defined benefit scheme the Company shall use the projected unit credit method and

attribute the welfare obligations calculated using the formula stipulated by the defined benefit scheme to the

service period of the employee and record the obligation in the current profit and loss or related assets cost.

(3) Accounting for termination benefits

The Company recognizes a liability and expenses in the current profit or loss for termination benefits at the earlier

of the following dates: when the Company can no longer withdraw the offer of those benefits; and when the

Company recognizes costs for restructuring involving the payment of termination costs.

(4) Accounting for other long-term employee benefits

The Company provides other long-term employee benefits to its employees. For those falling within the scope of

defined contribution scheme the Company shall account for them according to relevant requirements of the

defined contribution scheme. In addition the Company recognizes and measures the net liabilities or net assets of

the other long-term employee benefits according to relevant requirements of the defined contribution scheme.

24. Accrual liability

The obligation related to contingencies is the current obligation assumed by the company and performing this

obligation may result in an outflow of economic benefits and this obligation can be determined as the estimated

liabilities when the amount can be reliably measured. The Company makes initial measurement in accordance

with the best estimate for performing the related current obligation if the expenditure as needed has a continuous

range and the likelihood of occurrence of various results in this range is the same the best estimate is determined

by the median value within the range; if a number of items are involved the best estimate is determined by the

calculation of various possible outcomes and related probabilities.

At the balance sheet date the book value of estimated liabilities should be rechecked if there is conclusive

evidence indicates that this book value cannot truly reflect the current best estimate and then the book value

should be adjusted in accordance with the current best estimate.

25. Revenue(Income)

Accounting policy for recognition and measurement of revenue(income)

深圳中恒华发股份有限公司 2020 年半年度报告全文

1. Sales of goods

The Company shall ascertain the revenue incurred by selling goods in accordance with the received or receivable

price stipulated in the contract or agreement signed between the enterprise and the buyer unless the following

conditions are met simultaneously: ① the significant risks and rewards of ownership of the goods have been

transferred to the buyer by the enterprise; ② the enterprise retains neither continuous management right that

usually keeps relation with the ownership nor effective control over the sold goods; ③the relevant amount of

revenue can be measured in a reliable way; ④ relevant economic benefits may flow into the enterprise and ⑤ the

relevant costs incurred or to be incurred can be measured in a reliable way.Money collection for the contract or agreement use the mode of deferred actually has the financing features. The

revenue of commodity sales is recognized by the fair value of the money receivable on contract or agreement.

2. Labor service providing

If an enterprise can on the date of the balance sheet reliably estimate the outcome of a transaction concerning the

labor services it provides it shall recognize the revenue from providing services employing the

percentage-of-completion method. The enterprise can ascertain the schedule of completion

(percentage-of-completion) under the transaction concerning the providing of labor services based on calculation

of completed works.If an enterprise cannot on the date of the balance sheet measure the result of a transaction concerning the

providing of labor service in a reliable way it shall be conducted in accordance with the following circumstances

respectively: ①if the cost of labor services incurred is expected to be compensated the revenue from the

providing of labor services shall be recognized in accordance with the amount of the cost of labor services

incurred and the cost of labor services shall be carried forward at the same amount; ②if the cost of labor services

incurred is not expected to compensate the cost incurred should be included in the current profits and losses and

no revenue from the providing of labor services may be recognized.

3. Transition of asset use right

When economic benefits relating to transition of asset use right is likely to inflow into the Company and the

relevant income can be measured reliably the Company shall recognize such income from transition of asset use

right.The Company’s specific income recognition method: it is recognized as income when the product has been sent

out and signed for receipt by the other party for domestic sales; it is recognized as income when the product has

been shipped and its customs procedures have been completed with the relevant declaration documents for export

sales. Income from house leases and property management is recognized according to the lease contract

agreement receipt of relevant payments or relevant collection proof.深圳中恒华发股份有限公司 2020 年半年度报告全文

Different business models of similar business resulted in different accounting policies for revenue recogn ition

N/A

26. Government subsidy

1.Category of government subsidy and accounting treatment

Governments subsidy of the Company refer to the monetary and non-monetary assets obtained from government

for free (excluding the capital invested by government as an owner). If the government grants are monetary assets

it shall be measured according to the amount received or receivable. If the government grants are non-monetary

assets it shall be measured at fair value; if the fair value cannot be obtained reliably it shall be measured at the

nominal amount.Government grants related to daily activities are included in other income in accordance with the economic

business. Government grants not related to daily activities are included in the non-operating income and

expenditure.Government grants that the government documents clearly stipulate to be used for the purchase and establishment

or forming long-term assets in other way are recognized as government grants related to assets. For the

government grants that the government documents do not clearly specify the subsidy target and can form

long-term assets the part corresponding to the asset value is recognized as the government grants related to the

assets and the rest is recognized as the government grants related to the income. For the government grants which

are difficult to be distinguished recognize the whole as the government grants related to the income. Government

grants related to assets are recognized as deferred income. The amount recognized as deferred income is included

in the current profit and loss in a reasonable and systematic manner within the useful life of the relevant asset.Government grants other than government grants related to assets are recognized as government grants related to

income. If the government grants related to the income are used to compensate the related expenses or losses of

the enterprise in the future period recognize them as deferred income and include them in the current profit and

loss during the period of recognizing the related expenses. The government grants used to compensate the relevant

expenses or losses incurred by the enterprise are directly included in the current profit and loss.The Company obtained the policy preferential loan interest subsidy and the finance allocated the interest subsidy

funds to the loan bank and the loan bank provides loans to the Company at a preferential interest rate take the

actual amount of the loan received as the entry value of the loan and calculate the relevant borrowing costs

according to the loan principal the policy preferential interest rate. If the finance directly appropriates the interest

subsidy funds to the Company the Company will offset the relevant borrowing costs with the corresponding

interest subsidy.

2. Time points to recognize the government grants

Government grants are recognized when they meet the conditions attached to government grants and can be

深圳中恒华发股份有限公司 2020 年半年度报告全文

received. Government grants measured in accordance with the amount receivable are recognized when there is

conclusive evidence at the end of the period that it meets the relevant conditions stipulated in the financial support

policy and is expected to receive financial support funds. Other government grants other than government grants

measured in accordance with the receivable amount are recognized when the grant is actually received.

27. Deferred income tax asset / deferred income tax liability

1. Where there is difference between the carrying amount of the assets or liabilities and its tax base (as for an item

that has not been recognized as an asset or liability if its tax base can be determined in light of the tax law the tax

base shall recognized as the difference) the deferred income tax and deferred income tax liabilities shall be

determined according to the applicable tax rate in period of assets expected to recover or liability expected to pay

off.

2. The deferred income tax assets shall be recognized to the extent of the amount of the taxable income which it is

most likely to obtain and which can be deducted from the deductible temporary difference. On balance sheet date

if there have concrete evidence of obtaining in future period enough taxable amounts to deduct the deductible

temporary difference the un-confirmed deferred income tax assets in previous accounting period shall be

recognized. If there has no enough taxable amounts obtained in future period to deducted the deferred income tax

assets book value of the deferred income tax assets shall be kept in decreased.

3. The taxable temporary differences related to the investments of subsidiary companies and associated enterprises

shall recognized as deferred income tax liability unless the Company can control the time of the reverse of

temporary differences and the temporary differences are unlikely to be reversed in the expected future. As for the

deductible temporary difference related to the investment of the subsidiary companies and associated enterprises

deferred income tax assets shall be recognized while the temporary differences are likely to be reversed in the

expected future and it is likely to acquire any amount of taxable income tax that may be used for making up the

deductible temporary differences.

28. Leasing

(1) Accounting treatment for operating lease

Operating lease payments are recognized on a straight-line basis over the term of the relevant lease and are either

included in the cost of related asset or charged to profit or loss for the period.

(2) Accounting treatment for finance lease

Accounting treatment for finance lease: At the commencement of the lease term the Group records the leased

asset at an amount equal to the lower of the fair value of the leased asset and the present value of the minimum

lease payments. The difference between the recorded amounts is accounted for as unrecognized finance charge

using the effective interest method amortization during the lease term. Minimum lease payments deducting

unrecognized financing charges are listed as long-term payable.

29. Changes in important accounting policies and estimates

(1) Changes in important accounting policies

√ Applicable □ Not applicable

Content and reason of changes in

accounting policies

Approval procedure Note

On 5 July 2017 the Ministry of Finance Deliberated and approved by 3

session

深圳中恒华发股份有限公司 2020 年半年度报告全文

issued the Notice on Revision and

Issuance of Accounting Standards for

Business Enterprise No.14- Revenue

(Cai Kuai [2017] No.22) enterprises that

are listed both at home and abroad as

well as those listed overseas and

prepared their financial statements using

IFRS or Accounting Standards for

Business Enterprise shall enter into

force as of 1 Jan. 2018; other enterprise

listed at home shall enter into force as of

1 Jan. 2020; and the non-listed

enterprises that implement the

Accounting Standards for Business

Enterprise shall enter into force as of 1

Jan. 2021. In accordance with the

requirements of the above document the

Company will implement the New

Revenue Standards as of 1 Jan. 2020

and will make changes to the relevant

accounting policies in line with the

provisions of the New Revenue

Standards.

of 10

BOD

N/A

(2)Changes in important accounting estimates

□ Applicable √Not applicable

(3) Adjustment the financial statements at the beginning of the first year of implementation of new revenue

standards and new leasing standards since 2020

Applicable

Is it necessary to adjust the items of balance sheet at beginning of the year

□Yes √No

Explanation on the items of balance sheet at beginning of the year without adjustment

Implementation of the New Revenue Standards has no impact on the statement of the Company

(4)Retrospective adjustment of early comparison data description when initially implemented the new

revenue standards and new leasing standards since 2020

□ Applicable √Not applicable

VI. Taxes

1. Major tax and tax rate

Taxes Taxation basis Tax rate

VAT Domestic sales revenue 16% 13% 6% 5% 3%

Urban maintenance and construction tax Turnover tax payable 7%

Corporate income tax Taxable income 15% 25%

Educational surtax Turnover tax payable 3%

Local educational surtax Turnover tax payable 2% 1.5%

深圳中恒华发股份有限公司 2020 年半年度报告全文

Property tax 0% of original value of the property 1.2%

Explain the different taxation entity of the enterprise income tax

Taxation entity Income tax rate

Shenzhen Zhongheng Huafa Co. Ltd. 25%

Wuhan Hengfa Technology Co. Ltd. 15%

2. Tax preferences

According to the “Measures for the Determination of High-tech Enterprises” and through the enterprise

application expert review and public announcement and other procedures the Company’s wholly-owned

subsidiary Wuhan Hengfa Technology Co. Ltd. has been identified as a high-tech enterprise and obtained the

“High-tech Enterprise Certificate” jointly issued by the Science and Technology Department of Hubei Province

Hubei Provincial Finance Department Hubei Provincial Office SAT and Local Taxation Bureau of Hubei

Province on November 28 2017 the certificate number is GR201742001840 which is valid for 3 years. The

applicable corporate income tax rate of the subsidiary Wuhan Hengfa Technology Co. Ltd. for 2020 was 15%.VII. Notes to main items in consolidated financial statement

1. Monetary fund

RMB/CNY

Item Closing balance Opening balance

Cash on hand 363912.99 432301.32

Bank deposit 23000522.81 37660862.75

Other monetary fund 2529797.38 2336.93

Total 25894233.18 38095501.00

The total amount of money that has

restrictions on use due to mortgage

pledge or freezing

4081265.38 1450439.39

Other explanation

Other monetary funds are bank acceptance deposits.

2. Account receivable

(1)Category

RMB/CNY

Category

Closing balance Opening balance

Book balance

Bad debt

provision Book

value

Book balance Bad debt provision

Book

value Amoun

Proport

ion

Amoun

Accrua

l ratio

Amoun

Proport

ion

Amoun

Accrual

ratio

Account receivable

with bad debt

provision accrual

on a single basis

13146

290.18

7.46%

13146

290.18

100.00

13146

290.18

8.65%

13146

290.18

100.00

Including:

Ending Account

receivable with

single significant

75563

63.72

4.29%

75563

63.72

100.00

75563

63.72

4.29%

75563

63.72

100.00

深圳中恒华发股份有限公司 2020 年半年度报告全文

amount and

withdrawal bad

debt provision on

single basis

Ending Account

receivable with

single minor

amount but with

bad debts provision

accrued on a single

basis

55899

26.46

3.17%

55899

26.46

100.00

55899

26.46

3.17%

55899

26.46

100.00

Account receivable

with bad debt

provision accrual

on portfolio

16298

8083.3

92.54

4188.0

0.00%

16298

3895.2

13875

9879.4

91.35%

4188.0

0.00%

138755

691.43

Including:

Take account ages

of receivables as a

combination of

credit risk

characteristics

16298

8083.3

92.54

4188.0

0.00%

16298

3895.2

13875

9879.4

91.35%

4188.0

0.00%

138755

691.43

Total

17613

4373.5

100.00

13150

478.24

7.47%

16298

3895.2

15190

6169.6

100.00

13150

478.24

4.53%

138755

691.43

Accrual of bad debt provision on single basis: 5589926.46 Yuan

RMB/CNY

Name

Closing balance

Book balance Bad debt provision Accrual ratio Accrual causes

Hong Kong Haowei

Industrial Co. Ltd.

1870887.18 1870887.18 100.00% Uncollectible

TCL ACE ELECTRIC

APPLIANCE

(HUIZHOU) CO.

LTD.

1325431.75 1325431.75 100.00% Uncollectible

Qingdao Haier Parts

Procurement Co. Ltd.

1225326.15 1225326.15 100.00% Uncollectible

SKYWORTH

Multimedia

(Shenzhen) Co. Ltd.

579343.89 579343.89 100.00% Uncollectible

Shenzhen Portman

Bowling Club Co.

Ltd.

2555374.75 2555374.75 100.00% Uncollectible

Total 7556363.72 7556363.72 -- --

Accrual of bad debt provision on single basis: 5587643.49 Yuan

深圳中恒华发股份有限公司 2020 年半年度报告全文

RMB/CNY

Name

Closing balance

Book balance Bad debt provision Accrual ratio Accrual causes

Shenzhen Huixin

Video Technology Co.Ltd.

381168.96 381168.96 100.00% Uncollectible

Shenzhen Wandelai

Digital Technology

Co. Ltd.

351813.70 351813.70 100.00% Uncollectible

Shenzhen Dalong

Electronic Co. Ltd.

344700.00 344700.00 100.00% Uncollectible

Shenzhen Keya

Electronic Co. Ltd.

332337.76 332337.76 100.00% Uncollectible

Shenzhen Qunping

Electronic Co. Ltd.

304542.95 304542.95 100.00% Uncollectible

China Galaxy

Electronics (Hong

Kong) Co. Ltd.

288261.17 288261.17 100.00% Uncollectible

Dongguan Weite

Electronic Co. Ltd.

274399.80 274399.80 100.00% Uncollectible

Chuangjing 247811.87 247811.87 100.00% Uncollectible

Hong Kong New

Century Electronics

Co. Ltd.

207409.40 207409.40 100.00% Uncollectible

Shenyang Beitai

Electronic Co. Ltd.

203304.02 203304.02 100.00% Uncollectible

Beijing Xinfang Weiye

Technology Co. Ltd.

193000.00 193000.00 100.00% Uncollectible

TCL Electronics

(Hong Kong) Co. Ltd.

145087.14 145087.14 100.00% Uncollectible

Huizhou TCL Xinte

Electronics Co. Ltd.

142707.14 142707.14 100.00% Uncollectible

SkyWorth – RGB

Electronic Co. Ltd.

133485.83 133485.83 100.00% Uncollectible

Wuhan Hongxin

Communication

Technology Co. Ltd.

2282.97 2282.97 100.00% Uncollectible

Other 2037613.75 2037613.75 100.00% Uncollectible

Total 5589926.46 5589926.46 -- --

Accrual of bad debt provision on single basis:

RMB/CNY

Name

Closing balance

Book balance Bad debt provision Accrual ratio Accrual causes

Accrual of bad debt provision on portfolio: 4188.06 Yuan

深圳中恒华发股份有限公司 2020 年半年度报告全文

RMB/CNY

Name

Closing balance

Book balance Bad debt provision Accrual ratio

Within one year 162906849.90

1-2 years 78705.66 3935.28 5.00%

2-3 years 2527.77 252.78 10.00%

Over 3 years

Total 162988083.33 4188.06 --

Explanation on portfolio basis:

Take account ages of receivables as a combination of credit risk characteristics

Accrual of bad debt provision on portfolio:

RMB/CNY

Name

Closing balance

Book balance Bad debt provision Accrual ratio

Explanation on portfolio basis:

If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses please

refer to the disclosure of other receivables to disclose related information about bad-debt provisions:

□ Applicable √Not applicable

By account age

RMB/CNY

Account age Closing balance

Within one year(One year included) 162906849.90

1-2 years 78705.66

2-3 years 2527.77

Over 3 years 13146290.18

Over 5 years 13146290.18

Total 176134373.51

(2)Bad debt provision accrual collected or reversal in the period

Bad debt provision accrual in the period:

RMB/CNY

Category

Opening

balance

Amount changed in the period

Closing

balance Accrual

Collected or

reversal

Written-off Other

Take account

ages of

receivables as a

combination of

credit risk

characteristics

4188.06 4188.06

Total 4188.06 4188.06

Including major amount bad debt provision that collected or reversal in the period:

RMB/CNY

Enterprise Amount collected or reversal Collection by

深圳中恒华发股份有限公司 2020 年半年度报告全文

(4)Top 5 account receivables at ending balance by arrears party

RMB/CNY

Company

Closing balance of account

receivable

Proportion in total account

receivables at year-end

Closing balance of bad debt

provision

Qingdao Haidayuan

Purchasing Service Co.Ltd.

40178068.82 22.81%

Hong Kong Yutian

International Investment

Co. Ltd.

39240084.73 22.28%

ViewSonic Technology

(China) Co. Ltd.

20316906.99 11.53%

Viewsonic International

Copera

12471107.43 7.08%

Wuhan Edmond

Technology Co. Ltd.

8322183.18 4.72%

Total 120528351.15 68.42%

3. Receivable financing

RMB/CNY

Item Closing balance Opening balance

Note receivable 29776291.10 42096834.02

Total 29776291.10 42096834.02

Receivable financing Changes in the period and changes in fair value

□ Applicable √ Not applicable

If the provision for bad debts of accounts receivable is made in accordance with the general model of expected credit losses please

refer to the disclosure of other receivables to disclose related information about bad-debt provisions:

□ Applicable √ Not applicable

Other explanation:

The amount of pledged notes receivable at the end of the year is 9294702.94 yuan and the amount of notes receivable endorsed or

discounted at the end of the year but not yet due at the balance sheet date is 83072587.83 yuan. At the end of the year there is no bill

converted into accounts receivable due to the drawer's failure to perform the contract.

4. Account paid in advance

(1) By account age

RMB/CNY

Account age

Closing balance Opening balance

Amount Ratio Amount Ratio

Within one year 21510905.11 97.41% 22879096.29 99.44%

1-2 years 114550.00 0.52% 128541.17 0.56%

2-3 years 457946.44 2.07%

Total 22083401.55 -- 23007637.46 --

Explanation on reasons of failure to settle on important account paid in advance with age over one year:

Nil

深圳中恒华发股份有限公司 2020 年半年度报告全文

(2)Top 5 account paid in advance at ending balance by prepayment object

Company Closing balance Proportion in total accounts

paid in advance (%)

Hong Kong Yutian International Investment Co. Ltd. 7712238.37 34.92%

Haier Digital Technology (Qingdao) Co. Ltd. 4857494.00 22.00%

Hubei Century United Innovation Technology Co. Ltd. 2422299.74 10.97%

Nanjing Zhongdian Panda LCD Technology Co. Ltd. 1177502.40 5.33%

Guangzhou Shikun Electronic Technology Co. Ltd. 1102431.05 4.99%

Total 17271965.56 78.21%

Other explanation:

Nil

5. Other account receivable

RMB/CNY

Item Closing balance Opening balance

Other account receivable 4804531.82 6351361.16

Total 4804531.82 6351361.16

(1)Other account receivable

1) By nature

RMB/CNY

Nature Closing book balance Opening book balance

Margin and deposit 1611408.99 1583408.99

Borrow money 2135739.46 1944700.12

Intercourse funds 8912181.51 11534893.51

Rent receivable 5847389.48

Other 7209793.66 505560.36

Less: bad debt provision -15064591.80 -15064591.30

Total 4804531.82 6351361.16

2) Accrual of bad debt provision

RMB/CNY

Bad debt provision

Phase I Phase II Phase III

Total

Expected credit

losses over next 12

months

Expected credit losses for

the entire duration

(without credit

impairment occurred)

Expected credit losses for

the entire duration (with

credit impairment

occurred)

Balance on Jan. 1

2020

252531.52 14812059.78 15064591.30

Balance of Jan. 1 2020

in the period

—— —— —— ——

Balance on Jun. 30

2020

252531.52 14812059.78 15064591.30

Change of book balance of loss provision with amount has major changes in the period

□ Applicable √Not applicable

By account age

深圳中恒华发股份有限公司 2020 年半年度报告全文

RMB/CNY

Account age Closing balance

Within one year(One year included) 3813383.34

1-2 years 447859.44

2-3 years 3.00

Over 3 years 15607877.84

3-4 years 2250126.00

Over 5 years 13357751.84

Total 19869123.62

3) Bad debt provision accrual collected or reversal in the period

Bad debt provision accrual in the period:

RMB/CNY

Category

Opening

balance

Amount changed in the period

Closing

balance Accrual

Collected or

reversal

written-off Other

Phase I 252531.52 252531.52

Phase III 14812059.78 14812059.78

Total 15064591.30 15064591.30

Nil

Including the important amount collected or switches back in the period：

RMB/CNY

Company Amount collected or switches back Way of collection

Nil

4) Top 5 other account receivables at ending balance by arrears party

RMB/CNY

Enterprise Nature Closing balance Account age

Ratio in total

ending balance of

other receivables

Closing balance of

bad debt reserve

Portman Rent receivable 4021734.22 Over 3 years 20.24% 4021734.22

Shenzhen Jifang

Investment Co.Ltd

Rent receivable 1380608.00 Over 3 years 6.95% 1380608.00

Fujian Jielian

Electronics Co.

Ltd.Margin & deposit 800000.00 Over 3 years 4.03% 240000.00

Traffic accident

compensation

Intercourse funds 555785.81 Over 3 years 2.80% 555785.81

Hebei Botou Court Intercourse funds 520021.00 Over 3 years 2.62% 520021.00

Total -- 7278149.03 -- 36.63% 6718149.03

6. Inventory

Whether implemented the new revenue standards

□Yes √No

(1)Category

RMB/CNY

深圳中恒华发股份有限公司 2020 年半年度报告全文

Item

Closing balance Opening balance

Book balance

Inventories fall

provision or

contract

performance

costs

impairment

provision

Book value Book balance

Inventories fall

provision or

contract

performance

costs

impairment

provision

Book value

Raw materials 34099631.66 2844484.06 31255147.60 33817180.23 2844484.06 30972696.17

In product 0.00 0.00 0.00

Inventory

goods

31527522.07 486362.31 31041159.76 27590425.68 486362.31 27104063.37

Low priced and

easily worn

articles

276946.52 111981.81 164964.71 463639.07 111981.81 351657.26

Homemade

semi-finished

products

7828849.32 232090.00 7596759.32 8775225.16 232090.00 8543135.16

Total 73732949.57 3674918.18 70058031.39 70646470.14 3674918.18 66971551.96

(2) Inventories fall provision or contract performance costs impairment provision

RMB/CNY

Item

Opening

balance

Current increased Current decreased

Closing

balance Accrual Other

Reversal or

write-off

Other

Raw materials 2844484.06 2844484.06

In product 0.00 0.00

Inventory

goods

486362.31 486362.31

Low priced and

easily worn

articles

111981.81 111981.81

Homemade

semi-finished

products

232090.00 232090.00

Total 3674918.18 0.00 0.00 3674918.18

Nil

(3) Explanation on the ending balance of inventory contains an capitalized amount of borrowing costs

(4) Explanation on the current amortization amount of contract performance costs

7. Other current assets

RMB/CNY

Item Closing balance Opening balance

Value-added tax to be deducted 191700.06 1352757.06

Advance payment of income tax 42314.30 42314.30

深圳中恒华发股份有限公司 2020 年半年度报告全文

Total 234014.36 1395071.36

Other explanation:

Nil

8. Investment real estate

(1) Investment real estate measured at cost

√ Applicable □Not applicable

RMB/CNY

Item House and building Land use right

Construction in

process

Total

I. Original book value

1.Opening balance 133661686.94 133661686.94

2.Current increased

(1) Outsourcing

(2)inventory\fixed

assets\construction in

process transfer-in

(3)increased by

combination

3.Current decreased

(1) Disposal

(2) other transfer-out

4.Closing balance 133661686.94 133661686.94

II. Accumulated

depreciation and

accumulated

amortization

1.Opening balance 84708694.37 84708694.37

2.Current increased 864165.14 864165.14

(1) Accrual or

amortization

864165.14 864165.14

3.Current decreased

(1) Disposal

(2) other transfer-out

4.Closing balance 85572859.51 85572859.51

III. Depreciation

reserves

1.Opening balance

2.Current increased

(1)Accrual

深圳中恒华发股份有限公司 2020 年半年度报告全文

3. Current decreased

(1) Disposal

(2) other transfer-out

4.Closing balance

IV. Book value

1.Ending book value 48088827.43 48088827.43

2.Opening book value 48952992.57 48952992.57

9. Fixed assets

RMB/CNY

Item Closing balance Opening balance

Fixed assets 103896660.36 105372345.62

Disposal of fixed assets 92857471.69 92857471.69

Total 196754132.05 198229817.31

(1)Fixed asset

RMB/CNY

Item

House

building

Machinery

equipment

Transportat

ion

equipment

Tool

equipment

Office

equipment

Mold

equipment

Instrument

equipment

Total

I. Original

book value

73200617

.41

94646254

.95

6170584.

8754968.

7180143.

21250262

.83

3211408.

21441423

9.88

1.Opening

balance

4837879.

144092.43 61543.16 566194.98 6637.17

5616347.

2.Current

increased

4837879.

144092.43 61543.16 566194.98 6637.17

5616347.

(1)

Purchasing

(2)Constru

ction in

process

transfer-in

(3)increase

d by

combinatio

4478578. 76005.58 38466.72 21550.00 4614600.

深圳中恒华发股份有限公司 2020 年半年度报告全文

3.Current

decreased

34 64

(1)

Disposal or

scrapping

4478578.

76005.58 38466.72 21550.00

4614600.

4.Closing

balance

73200617

.41

95005556

.54

6170584.

8823055.

7203219.

21816457

.81

3196495.

21541598

6.91

II.

Accumulati

depreciatio

1.Opening

balance

18788535

.27

61361126

.34

4652063.

3809126.

5017484.

12840239

.70

2573318.

10904189

4.26

2.Current

increased

1023481.

2617622.

371522.84 567726.36 163539.20

1772335.

65549.82

6581777.

(1)Accrual

1023481.

2617622.

371522.84 567726.36 163539.20

1772335.

65549.82

6581777.

3.Current

decreased

3985319.

65010.21 34620.05 19395.00

4104345.

(1)

Disposal or

scrapping

3985319.

65010.21 34620.05 19395.00

4104345.

4.Closing

balance

19812017

.11

59993428

.53

5023586.

4311842.

5146403.

14612575

.00

2619472.

11151932

6.55

III.

Depreciatio

n reserves

1.Opening

balance

2.Current

increased

(1)Accrual

深圳中恒华发股份有限公司 2020 年半年度报告全文

3.Current

decreased

(1)

Disposal or

scrapping

4.Closing

balance

IV. Book

value

1.Ending

book value

53388600

.30

35012128

.01

1146998.

4511212.

2056816.

7203882.

577022.27

10389666

0.36

2.Opening

book value

54412082

.14

33285128

.61

1518520.

4945841.

2162659.

8410023.

638089.92

10537234

5.62

(2)Fixed assets leasing-out by operational lease

RMB/CNY

Item Ending book value

House building 774175.19

(3)Disposal of fixed assets

RMB/CNY

Item Closing balance Opening balance

Renovation of Gongming Huafa Electric

Town

92857471.69 92857471.69

Total 92857471.69 92857471.69

Other explanation

At the end of the period the original value of fixed assets that had been fully depreciated and still in use was RMB 43595200.48. At

the end of the period there was no fixed asset for which the property right certificate was not completed.

10. Construction in process

RMB/CNY

Item Closing balance Opening balance

Construction in process 500000.00

Total 500000.00

(1) Construction in process

RMB/CNY

Item

Closing balance Opening balance

Book balance

Impairment

provision

Book value Book balance

Impairment

provision

Book value

Gongming

Electronic City

500000.00 500000.00

深圳中恒华发股份有限公司 2020 年半年度报告全文

Reconstruction

Project

Total 500000.00 500000.00

(2) Change of major construction in process in the period

RMB/CNY

Item Budget

Openi

balanc

Curren

increas

Fixed

assets

transfe

r-in in

the

Period

Other

decrea

sed in

the

Period

Closin

balanc

Propor

tion of

project

invest

ment

budget

Progre

Accum

ulated

amoun

t of

interes

capital

ization

includi

ng:

interes

capital

ized

amoun

t of the

year

Interes

capital

ization

rate of

the

year

Source of

funds

Gong

ming

Electr

onic

City

Recon

structi

Project

50000

0.00

50000

0.00

Other

Total

50000

0.00

50000

0.00

-- -- --

11. Intangible assets

(1)Intangible assets

RMB/CNY

Item Land use right Patent right

Non-patented

technology

Software charges Total

I. Original book

value

55089774.36 3696416.41 58786190.77

1.Opening

balance

2.Current

increased

(1)

Purchasing

(2) internal

R&D

(3)increased by

combination

深圳中恒华发股份有限公司 2020 年半年度报告全文

3.Current

decreased

(1)

Disposal

4.Closing

balance

55089774.36 3696416.41 58786190.77

II. Accumulated

amortization

14879506.53 828655.90 15708162.43

1.Opening

balance

734823.26 176979.45 911802.71

2.Current

increased

734823.26 176979.45 911802.71

(1)Accrual

3.Current

decreased

(1)

Disposal

4.Closing

balance

15614329.79 1005635.35 16619965.14

III. Depreciation

reserves

1.Opening

balance

109427.90 109427.90

2.Current

increased

(1)Accrual

3.Current

decreased

(1) Disposal

4.Closing

balance

109427.90 109427.90

IV. Book value

1.Ending

book value

39475444.57 2581353.16 42056797.73

2.Opening

book value

40210267.83 2758332.61 42968600.44

The 100.00% proportion of intangible assets form by internal R&D in total book value of intangible assets at period-end

12. Long-term deferred expenditure

RMB/CNY

深圳中恒华发股份有限公司 2020 年半年度报告全文

Item Opening balance Current increased

Amortized in

Period

Other decreased Closing balance

Cloud service

charge

309781.15 116167.92 193613.23

Total 309781.15 116167.92 193613.23

Other explanation

Nil

13. Deferred income tax asset/Deferred income tax liability

(1)Deferred income tax assets without offset

RMB/CNY

Item

Closing balance Opening balance

Deductible temporary

differences

Deferred income tax

asset

Deductible temporary

differences

Deferred income tax

asset

Provision for assets

impairment

28835877.81 6787257.25 28835877.80 6787257.25

Deductible loss 969475.74 145421.36

Accrual liability 64411.00 16102.75 64411.00 16102.75

Total 29869764.55 6948781.36 28900288.80 6803360.00

(2)Amount of deferred income tax asset and deferred income tax liability after trade-off

RMB/CNY

Item

Trade-off between the

deferred income tax

assets and liabilities

Ending balance of

deferred income tax

assets or liabilities

after off-set

Trade-off between the

deferred income tax

assets and liabilities at

period-begin

Opening balance of

deferred income tax

assets or liabilities

after off-set

Deferred income tax

asset

6948781.36 6803360.00

(3)Deferred income tax asset without recognized

RMB/CNY

Item Closing balance Opening balance

Deductible temporary differences 3163837.81 3163837.81

Total 3163837.81 3163837.81

14. Other non-current assets

RMB/CNY

Item

Closing balance Opening balance

Book

balance

Impairment

provision

Book value

Book

balance

Impairment

provision

Book value

Advance payment for equipment 225700.00 225700.00 225700.00 225700.00

Total 225700.00 225700.00 225700.00 225700.00

Other explanation:

Nil

深圳中恒华发股份有限公司 2020 年半年度报告全文

15. Short-term loans

(1)Category

RMB/CNY

Item Closing balance Opening balance

Loan in pledge 12000000.00

Secured portfolio loan 12633898.20

Total 24633898.20

Explanation on category of Short-term loans

Nil

16. Note payable

RMB/CNY

Category Closing balance Opening balance

Bank acceptance bill 8617287.25 16761590.51

Total 8617287.25 16761590.51

Totally 0 Yuan due note payable are paid at period-end

17. Account payable

(1)Account payable

RMB/CNY

Item Closing balance Opening balance

Within one year(One year included) 128535980.81 95647603.05

Over one year 11761690.42 13157302.15

Total 140297671.23 108804905.20

(2)Major account payable over one year

RMB/CNY

Item Closing balance Reasons for non-payment or carry over

Shenzhen Yuehai Global Logistics Co.Ltd.

2858885.97 Without settlement

LG 1906267.50 Without settlement

Dongjin Electronics (Nanjing) P lasma

Co. Ltd.

617963.45 Without settlement

Total 5383116.92 --

Other explanation:

Nil

18. Account received in advance

(1)Account received in advance

RMB/CNY

Item Closing balance Opening balance

Within one year 713265.94 257789.27

Over one year 153480.51 98656.94

Total 866746.45 356446.21

19. Employees remuneration payable

(1) Employees remuneration payable

RMB/CNY

深圳中恒华发股份有限公司 2020 年半年度报告全文

Item Opening balance

Increase during the

period

Decrease during this

period

Closing balance

I. Short-term benefits 5848652.79 28058836.53 29658577.70 4248911.62

II. Post-employment

benefits-defined

contribution plans

28688.46 402183.31 399161.71 31710.06

III. Dismiss welfare 45365.00 45365.00

Total 5877341.25 28506384.84 30103104.41 4280621.68

(2)Short-term benefits

RMB/CNY

Item Opening balance

Increase during the

period

Decrease during this

period

Closing balance

1. Wages bonuses

allowances and subsidies

4854064.03 24374368.64 26034732.48 3193700.19

2. Welfare for workers

and staff

2866768.25 2816528.25 50240.00

3. Social insurance 37448.18 624962.00 615419.33 46990.85

Including:

Medical insurance

35718.92 536635.36 527221.51 45132.77

Work

injury insurance

740.73 9908.69 9881.12 768.30

Maternity

insurance

988.53 78417.95 78316.70 1089.78

4. Housing

accumulation fund

24310.00 191777.64 190937.64 25150.00

5. Labor union

expenditure and

personnel education

expense

932830.58 960.00 960.00 932830.58

Total 5848652.79 28058836.53 29658577.70 4248911.62

(3)Defined contribution plans

RMB/CNY

Item Opening balance

Increase during the

period

Decrease during this

period

Closing balance

1. Basic endowment

insurance

27561.59 386165.97 383205.97 30521.59

2. Unemployment

insurance

1126.87 16017.34 15955.74 1188.47

Total 28688.46 402183.31 399161.71 31710.06

Other explanation:

Nil

20. Tax payable

RMB/CNY

深圳中恒华发股份有限公司 2020 年半年度报告全文

Item Closing balance Opening balance

VAT 2937402.63 3192458.47

Corporate income tax 5779084.29 7032715.76

Individual income tax 14384.24 30265.20

Urban maintenance and construction tax 1033187.22 1050282.59

Property tax 548114.12 310683.11

Land use tax 239920.53 25424.98

Educational surtax 443562.78 450889.35

Local educational surtax 229494.62 234049.86

Dike fee 1665.00 1665.00

Stamp tax 39201.60 39940.66

Disposal fund of waste electrical

products

1302550.00 509570.00

Total 12568567.03 12877944.98

Other explanation:

Nil

21. Other account payable

RMB/CNY

Item Closing balance Opening balance

Interest payable 89365.28

Other account payable 28140118.39 27938227.34

Total 28140118.39 28027592.62

(1)Interest payable

RMB/CNY

Item Closing balance Opening balance

Interest of short-term loans payable 89365.28

Total 89365.28

Significant overdue and unpaid interest:

RMB/CNY

Loan unit Overdue amount Reason for overdue

Other explanation:

Nil

(2)Other account payable

1) Other account payable by nature

RMB/CNY

Item Closing balance Opening balance

Margin and deposit 9918627.97 10354134.67

Lease management fee 5702755.27 3251610.67

Intercourse funds 9134770.37 8544383.61

After sale and repairmen 1318518.00 1747809.47

Other 2065446.78 4040288.92

Total 28140118.39 27938227.34

深圳中恒华发股份有限公司 2020 年半年度报告全文

2) Significant other account payable with over one year age

RMB/CNY

Item Closing balance Reasons for non-payment or carry over

Shenzhen SED Property Development

Co. Ltd.

1853393.35 Without settlement

Shenzhen Huayongxing Environmental

Protection Technology Co. Ltd.

1000000.00 Margin

Linghang Technology (Shenzhen) Co.Ltd

656345.28 Without settlement

Shenzhen Tongxing Electronics Co. Ltd. 578259.83 Without settlement

Shenzhen Yongdasheng Investment

Development Co. Ltd.

558970.00 Margin

Total 4646968.46 --

Other explanation

22. Long-term loans

(1) Category

RMB/CNY

Item Closing balance Opening balance

Mortgage loan 67000000.00 73000000.00

Total 67000000.00 73000000.00

Description of Long-term loans classification:

Nil

Other explanation including interest rate range:

The borrowing interest rate is the same as the bank's benchmark interest rate for loans of the same grade in the same period and the

current period is 7.9166%.

23. Accrual liability

RMB/CNY

Item Closing balance Opening balance Causes

Pending action 64411.00 64411.00 Business and labor disputes

Total 64411.00 64411.00 --

Other explanations including important assumptions and estimation about important estimated liabilities:

According to the Enforcement Notice ( (2008) SFFZZ No.522-529) of Shenzhen Intermediate People's Court Shenzhen Labor

Dispute Arbitration Commission issued SLZC [2007] No. 1069-1077 No. 1079 No. 1081 and No. 1085-1087 arbitration awards for

the labor dispute case of Cai Yaoqiang and other thirteen people which has taken legal effect. According to the Basic Information

Credit Report of Enterprises the Company has total unexecuted labor dispute subject of 64411.00 yuan and the Company

recognizes it as the estimated liability.

24. Deferred income

RMB/CNY

Item Opening balance

Increase during

the period

Decrease during

this period

Closing balance Causes

Government

subsidy

2331720.00 2190000.00 348540.00 4173180.00

Industrial

transformation

subsidies

Total 2331720.00 2190000.00 348540.00 4173180.00 --

深圳中恒华发股份有限公司 2020 年半年度报告全文

Items involving Government subsidy:

RMB/CNY

Liability

Opening

balance

New

subsidy

increased

in the

period

Amount

reckoned in

non-operati

ng income

in the

period

Amount

included in

other

income in

the current

period

Amount of

cost and

expense

offset in

the current

period

Other

change

Closing

balance

Assets-rela

ted/Income

-related

Governme

nt subsidy

2331720.

2190000.

348540.00

4173180.

Assets-rela

ted

Other explanation:

Nil

25. Share capital

In RMB

Opening

balance

Changes in the Period (+-)

Closing balance

Issuing

new

Bonus shares

Shares transfer

from public

reserves

Other Subtotal

Total shares 283161227.00 283161227.00

Other explanation:

Up to 30

June 2020 the shares of the Company held by controlling shareholder has 116100000 shares in status of pledge taking

41% of the total share capital; mortgagee is China Merchants Securities Assets Management Co. Ltd. Shares in judicial freeze

amounted as 119289894 shares.

26. Capital surplus

RMB/CNY

Item Opening balance

Increase during the

period

Decrease during this

period

Closing balance

Capital premium

(equity premium)

96501903.02 96501903.02

Other capital surplus 50085368.48 50085368.48

Total 146587271.50 146587271.50

Other explanation including changes and reasons of changes:

Nil

27. Surplus reserves

RMB/CNY

Item Opening balance

Increase during the

period

Decrease during this

period

Closing balance

Statutory surplus

reserves

21322617.25 21322617.25

Discretionary surplus

reserve

56068976.00 56068976.00

Total 77391593.25 77391593.25

Other explanation including changes and reasons for changes:

Nil

深圳中恒华发股份有限公司 2020 年半年度报告全文

28. Retained profit

RMB/CNY

Item Current period Last period

Retained profit at period-begin after adjustment -177712041.86 -183172091.01

Add: net profit attributable to owners of the

parent company

3165597.55 5460049.15

Retained profit at period-end -174546444.31 -177712041.86

Details about adjusting the retained profits at the beginning of the period:

1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the retained

profits at the beginning of the period amounting to 0 Yuan.

2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 0 Yuan.

3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0 Yuan

4) Merge scope changes caused by the same control affect the retained profits at the beginning of the period amounting to 0 Yuan.

5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan

29. Operating income and cost

RMB/CNY

Item

Current period Last period

Income Cost Income Cost

Main business 268465953.89 249723766.92 310399495.33 285485316.56

Other business 32237467.49 14235885.71 28790678.72 12094891.78

Total 300703421.38 263959652.63 339190174.05 297580208.34

Information relating to revenue:

RMB/CNY

Category Branch 1 Branch 2 Total

Including:

Information relating to performance obligations:

Nil

Information related to the transaction price apportioned to the remaining performance obligations:

The amount of income corresponding to the performance obligations that have been signed at the end of this reporting period but

have not yet been fulfilled or have not done with fulfillment is 0.00 yuan among them yuan of revenue is expected to be recognized

in YEAR yuan of revenue is expected to be recognized in YEAR and yuan of revenue is expected to be recognized in YEAR.Other explanation

30. Tax and surcharges

RMB/CNY

Item Current period Last period

Urban maintenance and construction tax 61315.21 68304.63

Educational surtax 27476.42 33062.14

深圳中恒华发股份有限公司 2020 年半年度报告全文

Property tax 463763.85 706398.83

Land use tax 247776.03 278113.28

Vehicle use tax 0.00 3420.00

Stamp tax 187803.80 205372.70

Local education development fee 15920.74 15438.42

Total 1004056.05 1310110.00

Other explanation:

Nil

31. Sales expense

RMB/CNY

Item Current period Last period

Employees remuneration 1544285.76 2350311.18

Freight 3120326.41 2883611.66

Commodity inspection fee 512749.42 46041.22

Customs fee 30322.36 85340.66

Commodity loss 2042886.52 1669582.49

Other 1849508.92 2095493.01

Total 9100079.39 9130380.22

Other explanation:

Others are mainly after-sales service fees low-value and easy-to-use amortization and office expenses.

32. Administrative expense

RMB/CNY

Item Current period Last period

Salary 4290516.96 4819623.00

Depreciation charge 1094911.50 1108894.27

Social insurance premium 307654.93 1183069.73

Social expenses 2149616.64 1975609.14

Taxes and surcharge 0.00 0.00

Employee benefits 975973.80 453205.88

Travel expenses 997820.46 913668.77

Amortization of intangible assets 911802.71 872474.94

Traffic expenses 728044.47 880726.46

Consulting fee 154420.23 365549.99

Security 826723.53 478584.83

Repairs 1186397.36 981308.38

Audit fee 703883.50 812786.23

Office expenses 534213.91 775082.77

Communication fee 66922.51 106108.39

Amortization of low cost and short lived

articles

204519.80 76180.62

Securities information disclosure fee 247008.75 255915.74

Litigation fee 0.00 0.00

Staff education 123799.49 86051.41

深圳中恒华发股份有限公司 2020 年半年度报告全文

Water and electricity fee 194204.27 336221.83

Lease fee 496532.52 2444912.69

Eco fee 202101.81 194709.07

Premium 0.00 45221.73

Other expenses 685293.51 451085.52

Total 17082362.66 19616991.39

Other explanation:

Nil

33. R& D expenses

RMB/CNY

Item Current period Last period

Personnel cost 1801065.20 2086504.20

Direct input cost 846252.61

Depreciation and amortization expenses 499584.18 218337.01

Other related expenses 122775.88 575899.04

Total 2423425.26 3726992.86

Other explanation:

Nil

34. Financial expense

RMB/CNY

Item Current period Last period

Interest expenditure 4755143.83 5355676.92

Less: interest income 529170.31 419336.28

Add: Exchange loss -800845.19 -87878.70

Add: Other expense 59100.48 219909.30

Total 3484228.81 5068371.24

Other explanation:

Nil

35. Other income

RMB/CNY

Sources Current Period Last Period

Incentive fund for Wuhan industrial

intelligent transformation demonstration

project in 2019

100000.00 200000.00

Provincial special fund for

transformation and upgrading of

traditional industry for 2018

29540.00 59080.00

Industrial investment and technological

transformation and intelligent

transformation in 2020

219000.00

Total 348540.00 259080.00

36. Investment income

RMB/CNY

深圳中恒华发股份有限公司 2020 年半年度报告全文

Item Current period Last period

Investment income generated by financial

products

66780.40 74936.14

Total 66780.40 74936.14

Other explanation:

Nil

37. Credit impairment loss

RMB/CNY

Item Current period Last period

Bad debt loss of other account receivable -8432.50

Total -8432.50

Other explanation:

38. Assets impairment loss

RMB/CNY

Item Current period Last period

Other explanation:

Nil

39. Asset disposal income

RMB/CNY

Source of asset disposal income Current period Last period

Income from fixed assets sold -99867.53 129039.57

40. Non-operating income

RMB/CNY

Item Current period Last period

Amount included in current

non-recurring profits or losses

Government subsidy 223300.00

Liquidated damages income 1976.00 1976.00

Fine income 9458.00

Other 43224.06 43224.06

Total 45200.06 232758.00 45200.06

Government subsidy reckoned into current gains/losses:

RMB/CNY

Item

Issuing

subject

Offering

causes

Nature

Subsidy

impact

current

gains/losse

s (Y/N)

The special

subsidy

(Y/N)

Amount in

the Period

Amount in

last period

Assets-rela

ted/income

-related

Other explanation:

Nil

41. Non-operating expenditure

RMB/CNY

Item Current period Last period

Amount included in current

non-recurring profits or losses

深圳中恒华发股份有限公司 2020 年半年度报告全文

Penalty expenditure 7302.38 1100.00

Total 7302.38 1100.00

Other explanation:

Nil

42. Income tax expenses

(1)Statement of income tax expense

RMB/CNY

Item Current period Last period

Current income tax expense 982790.94 388847.80

Deferred income tax expense -145421.36 215062.28

Total 837369.58 603910.08

(2)Adjustment on accounting profit and income tax expenses

RMB/CNY

Item Current period

Total profit 4002967.13

Income tax based on statutory/applicable rate 1000741.78

Impact by different tax rate applied by subsidies 96947.57

Impact of deductible loss of un-recognized deferred income

tax assets in the prior period of use

-260516.32

Impact of the deductible temporary differences or deductible

loss of deferred income tax asset without recognized in the

period

196.54

Income tax expense 837369.58

Other explanation

Nil

43. Annotation of cash flow statement

(1)Cash received with other operating activities concerned

RMB/CNY

Item Current period Last period

Unit intercourse account 423061.34 1869387.03

Collection management fee and utilities

etc.

870339.55 1189095.86

Repayment from employees 538.70 32462.10

Margin 178441.66 40263.30

Interest income 80873.96 48764.26

Government subsidy 2190000.00 223300.00

Total 3743255.21 3403272.55

Note of cash received with other operating activities concerned:

The cash received with other operating activities concerned in the period mainly including collection management fee and utilities

government subsidy margin and other intercourse funds

(2)Cash paid with other operating activities concerned

RMB/CNY

Item Current period Last period

深圳中恒华发股份有限公司 2020 年半年度报告全文

Unit intercourse account 12099293.44 1315156.92

Advances to employees 1518843.50 2563755.64

Deposit margin 777760.00 1656408.00

Social expenses 2225069.64 1299864.19

Water and electricity 195404.27 2365472.40

Travel expenses 631364.12 638939.25

Freight 2885107.75 2983611.66

Traffic expenses 708540.18 521848.44

Repairs 1186397.36 1067602.12

Audit and consulting fees 700000.00 792049.00

Security 363200.00 620945.00

Financial institutions handling fee 54316.41 62759.86

Office expenses 184663.65 508512.98

Communication fee 66922.51 154173.54

Lease fee 496532.52 2444912.69

Other 2183661.37 1614513.51

Total 26277076.72 20610525.20

Note of cash paid with other operating activities concerned:

Other cash paid in this period related to operating activities mainly include cash payment of management expenses sales expenses

personal transactions deposits payment of utilities and management fees.

(3)Cash received with other investment activities concerned

RMB/CNY

Item Current period Last period

Redemption of principal of financial

products

35000000.00 49000000.00

Total 35000000.00 49000000.00

Note of cash received with other investment activities concerned

Nil

(4)Cash paid related with investment activities

RMB/CNY

Item Current period Last period

Purchasing financial products 35000000.00 49000000.00

Total 35000000.00 49000000.00

Note of cash paid related with investment activities

Nil

44.Supplementary information to statement of cash flow

(1)Supplementary information to statement of cash flow

RMB/CNY

Supplementary information Current period Last period

1. Net profit adjusted to cash flow of

operation activities:

-- --

Net profit 3165597.55 2580411.13

Depreciation of fixed assets 6364464.64 6025283.55

深圳中恒华发股份有限公司 2020 年半年度报告全文

consumption of oil assets and depreciation

of productive biology assets

Amortization of intangible assets 911802.71 872474.94

Amortization of long-term deferred

expenditure

116167.92 116167.92

Loss from disposal of fixed assets

intangible assets and other long-term

assets(gain is listed with “-”)

-156701.09 -129039.57

Financial expenses (gain is listed with “-”) 3786650.62 5262857.89

Investment loss (income is listed with “-”) -66780.40 -74936.14

Decrease of deferred income tax assets

(increase is listed with “-”)

-145421.36

Decrease of inventory (increase is listed

with “-”)

-3086479.43 -23735632.38

Decrease of operating receivable accounts

(increase is listed with “-”)

-15138062.18 -17697245.84

Increase of operating payable accounts

(decrease is listed with “-”)

25448973.26 71973879.06

Net cash flow arising from operating

activities

21200212.24 45194220.56

2. Material investment and financing not

involved in cash flow:

-- --

3. Net change of cash and cash

equivalents:

-- --

Balance of cash at period end 21812967.80 38041641.85

Less: Balance of cash at period-begin 36645061.61 29171804.99

Net increased amount of cash and cash

equivalent

-14832093.81 8869836.86

(2)Constitution of cash and cash equivalent

RMB/CNY

Item Closing balance Opening balance

Ⅰ. Cash 21812967.80 36645061.61

Including: Cash on hand 363912.99 432301.32

Bank deposit available for payment

at any time

21449054.81 36212760.29

Ⅲ. Balance of cash and cash equivalent at

period-end

21812967.80 36645061.61

Other explanation:

Ending Monetary fund-other monetary fund refers to the margin of bank acceptance 2529797.38 Yuan which is

not belonging to the cash and cash equivalent. Ending monetary fund-Bank deposit has 1551468.00 Yuan frozen

by the court which is not belonging to the cash and cash equivalent either.

45. Assets with ownership or use right restricted

RMB/CNY

Item Ending book value Restriction reasons

深圳中恒华发股份有限公司 2020 年半年度报告全文

Monetary fund 4081265.38

Bank acceptance deposit is 25297.38

yuan and the court freezes 1551468

yuan

Fixed assets 12779094.73 Bank loan secured

Intangible assets 2761798.94 Bank loan secured

Receivable financing 9294702.94 Pledged

Investment real estate 36260337.64 Bank loan secured

Disposal of fixed assets 92857471.69 Court closure

Total 158034671.32 --

Other explanation:

Nil

46. Item of foreign currency

(1) Item of foreign currency

RMB/CNY

Item

Closing balance of foreign

currency

Rate of conversion

Closing RMB balance

converted

Monetary fund -- --

Including:USD 760991.14 7.07 5380968.35

Euro

HKD 100032.66 0.91 91369.83

Account receivable -- --

Including:USD 9158403.66 7.07 64759072.28

Euro

HKD

Long-term loans -- --

Including:USD

Euro

HKD

Account paid in advance

Including:USD 1090685.67 7.07 7712238.37

Other explanation:

Nil

47. Government subsidy

(1)Government subsidy

RMB/CNY

Category Amount Item

Amount reckoned into current

gains/losses

Industrial investment and

technological transformation

and intelligent transformation

in 2020

2190000.00 Deferred income 2190000.00

深圳中恒华发股份有限公司 2020 年半年度报告全文

VIII. Equity in other subjects

1. Equity in subsidiary

(1)Constitute of enterprise group

Subsidiary

Main operation

place

Registered

place

Business nature

Share-holding ratio

Acquired way

Directly Indirectly

HUAFA Lease

Company

Shenzhen Shenzhen

Property

management

60.00%

New

investment

HUAFA

Property

Company

Shenzhen Shenzhen

Property

management

100.00%

New

investment

Hengfa

Technology

Company

Wuhan Wuhan

Production

sales

100.00%

New

investment

HUAFA

Hengtian

Company

Shenzhen Shenzhen

Property

management

100.00%

New

investment

HUAFA

Hengtai

Company

Shenzhen Shenzhen

Property

management

100.00%

New

investment

Explanation on share-holding ratio in subsidiary different from ratio of voting right:

Nil

Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over

half and over voting rights:

Nil

Major structured entity included in consolidate statement:

Nil

Basis of termination of agent or consignor:

Nil

Other explanation:

Nil

IX. The risk associated with financial instruments

The Group's main financial instruments include loans receivables payable tradable financial assets trading and

financial liabilities etc. The risks associated with these financial instruments and the risk management policies

adopted by the Group to reduce these risks are described below. The management of the Group manages and

monitors these risk exposures to ensure that the above risks are controlled within the limits.Various risk management goals and policies

The objective of the Group's risk management is to strike a proper balance between risks and profits minimize the

negative impact of risks on the Group's operating results and maximize the benefits of shareholders and other

equity investors. Based on this risk management objectives the Group's basic strategy for risk management is to

identify and analyze the risks faced by the Group establish appropriate risk bottom lines and carry out risk

management and timely and reliably monitor the risks control them within the limits.

(1) Market risk

The market risk of financial instruments refers to the risk that the fair value or the future cash flows of financial

instruments fluctuate due to the changes in market prices including foreign exchange risk interest rate risk and

深圳中恒华发股份有限公司 2020 年半年度报告全文

other price risk.

1) FX risk

The Group's exchange rate risk is mainly related to US dollars and Hong Kong dollars. Except the Group's second

level subsidiary Hengfa Technology Company’s monitor business has day-to-day operations in US dollars; other

principal business activities of the Group settle accounts in RMB. On 30 June 2020 except for the US dollar

balance of assets and liabilities in below table and the sporadic Hong Kong dollar balance the Group's assets and

liabilities are all RMB balance. The exchange rate risk arising from the assets and liabilities of the US dollar

Hong Kong dollar balance may have an impact on the Group's operating results.Item 2020-6-30(RMB conversion) 2019-12-31(RMB

conversion)

2018-12-31(RMB conversion)

Monetary fund -USD 760991.14 9356958.43 2010146.81

Monetary fund -HKD 100032.66 28.61 28.62

Account receivable -USD 9158403.66 40836244.74 44086655.90

Account paid in

advance-USD

1090685.67 15454592.53 19035307.91

Account payable -USD - -

Short-term loans-USD - 22676280.00 25068657.88

The Company eyes on the influence from variation of exchange

2) Interest rate risk

The interest rate risk of the Group arises from bank loans. The financial liabilities of floating interest rate make

the Group face cash flow interest rate risk and the financial liabilities of fixed rate make the Group face the

interest rate risk of fair value. The Group determines the relative proportion of fixed rate and floating interest rate

contracts based on the prevailing market environment. On 30 June 2020 the Group's interest-bearing debt was

mainly the floating interest rate loan contract denominated in Renminbi and US dollars amounting to RMB

79000000.00 (December 31 2019: RMB 109633898.20).

The Group's risk of changes in the cash flow of financial instruments due to changes in interest rates is mainly

related to the floating interest rate bank loans. The Group's policy is to maintain the floating interest rate of these

loans so as to eliminate the fair value risk of the interest rate changes.

3) Price risk

The Group sells monitors and so on at market prices and is therefore affected by such price fluctuations.

(2) Credit risk

Credit risk refers to the risk that a party of the financial instrument does not fulfill its obligations and causes

property loss to another party. On June 30 2020 the maximum credit risk exposure that may cause financial

losses to the Group is mainly attributable to the failure of the other party to fulfill its obligations resulting in the

losses of the Group's financial assets and the Group's financial guarantees including:

The carrying amount of the financial assets recognized in the consolidated balance sheet; for the financial

instruments measured at fair value the book value reflects its risk exposures but not the maximum risk exposure

and its maximum risk exposure changes with the future changes in fair value.In order to reduce the credit risk the Group has set up a special department to determine the credit line carry out

the credit approval and implement other monitoring procedures to take necessary measures to recover the overdue

深圳中恒华发股份有限公司 2020 年半年度报告全文

credit. In addition the Group reviews the recovery of each individual receivable at every balance sheet date to

accrue sufficient provision for bad debts of uncollectible funds. As a result the Group's management believes that

the Group's credit risk has been greatly reduced.The Group's working capital is deposited in banks with higher credit ratings so the credit risk of working capital

is low.The Group has adopted necessary policies to ensure that all customers have good credit records. In addition to the

top five account receivables the Group has no other significant credit risk.The total amount of the top five account receivables is RMB 120528351.15.

(3) Liquidity risk

The liquidity risk is the risk that the Group is unable to fulfill its financial obligations on the due date. The Group's

approach to manage liquidity risk is to ensure that there is sufficient financial liquidity to fulfill its due debts but

not cause unacceptable losses or damages to the corporate reputation. The Group regularly analyzes the structure

and duration of liabilities to ensure there are sufficient funds. The management of the Group monitors the use of

bank loans and ensures the compliance with loan agreement and conducts financing consultations with financial

institutions in order to maintain a certain line of credit and reduce the liquidity risk.The financial assets and financial liabilities held by the Group based on the maturity of the undiscounted

outstanding contractual obligations are analyzed as follows

Amount on 30 June 2020

Item Within one year 1-2 years 2-3 years Over 3 years Total

Financial assets

Monetary funds 25894233.18 25894233.18

Receivable financing 29776291.10 29776291.10

Account receivable 162906849.90 78705.66 2527.77 13146290.18 176134373.51

Other account receivable 3813383.34 447859.44 3.00 15607877.84 19869123.62

Account paid in advance 22083401.55 22083401.55

Financial liabilities -

Notes payable 8617287.25 8617287.25

Account payable 140297671.23 140297671.23

Other accounts payable 28140118.39 28140118.39

Advance receivable 866746.45 866746.45

Wage payable 4280621.68 4280621.68

2. Sensitivity analysis

The Group uses the sensitivity analysis technique to analyze the possible impacts of the reasonable and possible

changes in risk variable on the currents profit and losses or the owner's equity. Since any risk variable rarely

changes in isolation and the correlation among the variables has a significant effect on the final effect amount of a

certain risk variable changes and the following contents are on the assumption that the change in each variable is

independent.

(1) Sensitivity analysis of foreign exchange risk

Sensitivity analysis of foreign exchange risk assumes that all overseas operating net investment hedges and cash

深圳中恒华发股份有限公司 2020 年半年度报告全文

flow hedges are highly effective.On the basis of the above assumptions in case that other variable don’t change the after-tax effect of the possible

and reasonable changes in the exchange rate on the current profits and losses are as follows

Item Exchange rate

fluctuation

Jan.-Jun. 2020 Jan.-Jun. 2019

Impact on net profit Impact on owner's

equity

Impact on net

profit

Impact on owner's

equity

All foreign

currency

5% appreciation of

the RMB

2984313.25 2984313.25 1031885.69 1031885.69

All foreign

currency

5% devaluation of

the RMB

-2984313.25 -2984313.25 -1031885.69 -1031885.69

X. Related party and related transactions

1. Parent company of the enterprise

Parent company Registration place Business nature Registered capital

Share-holding

ratio on the

enterprise for

parent company

Voting right ratio

on the enterprise

Wuhan Zhongheng

New Science &

Technology

Industrial Group

Co. Ltd

Wuhan

Production and

sales real estate

development and

sales housing

leasing and

management

138000000.00 42.13% 42.13%

Explanation on parent company of the enterprise

Nil

The ultimate control of the enterprise is Li Zhongqiu.Other explanation:

Nil

2. Subsidiary of the Enterprise

Found more in VIII. Equity in other entity in the Note

3. Other Related party

Other Related party Relationship with the Enterprise

Shenzhen Zhongheng Huafa Technology Co. Ltd.